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Understanding investment types

The future of cryptocurrency

Educating investors on Vanguard’s stance on crypto, and how our ownership structure and investing philosophy fit into the picture.
4 minute read
April 20, 2022
Understanding investment types
Vanguard values

At a glance

  • Cryptocurrencies have grown in popularity over the past several years.
  • While some investors have seen quick success with crypto, our investing principles emphasize building a diversified portfolio and tuning out the noise.
  • A continued focus on your goals and investing for the long term will give you the best chance for investment success.

Cryptocurrencies haven't been around for long, but they've gained traction as one of the hottest—and most speculative—investments on the market. While it may be tempting to chase the latest investing trend, our guidance is to avoid fads, stay focused on your goals, and invest for the long term.

What's a cryptocurrency?

Cryptocurrencies are digital assets that serve as a medium of exchange or store of value. They're recorded and transferred on an online ledger known as blockchain, which is distributed on a peer-to-peer network. Learn more about cryptocurrencies.

Is there value in owning cryptocurrency?

Some investors have had success trading various cryptocurrencies in the short term. However, there are a few issues that can make crypto a problematic investment for long-term portfolios.

  • They’re highly speculative. While you may gain a quick win with these investments, there's no evidence that they're built for the long term.
  • They have significant price volatility. Market swings happen, but the price fluctuations of many cryptocurrencies make them relatively unstable.
  • They have high commissions. Many crypto exchanges charge high fees to trade, with some as high as 2.5% per trade. We believe in low-cost investing. In fact, Vanguard charges $0 in commissions for online trading of stocks, ETFs, and Vanguard mutual funds.

Do cryptocurrencies fit within Vanguard's investing philosophy?

Our 4 investing principles were created with you and your long-term goals in mind. Our guidance? Focus on things you can control:

  • Set clear, attainable investment goals.
  • Create a balanced, diversified portfolio.
  • Minimize your costs.
  • Maintain perspective and stay disciplined.

These core principles have served our investors through market ups and downs (and a pandemic) and continue to do so as investing trends come and go. It's easy to get swept up in the latest—and supposedly greatest—investment fad, but quick wins aren't sustainable for long-term investing. If you find yourself debating whether to dip your toes into the current investment craze, remember our 4 investing principles.

Our final thoughts

When you invest at Vanguard, you're not just an investor—you're also an owner.* This unique structure means that our interests are aligned with yours. Vanguard will focus on your investment success, no matter what.

As interest in cryptocurrency continues to increase, we'll continue to help you choose what's best for you and your portfolio. We believe that building a balanced, diversified portfolio and focusing on your long-term goals can give you the best chance for investment success.

Invest for the long term

Invest for the long term

Read more in this series

Cryptocurrencies and Vanguard: What we think
Educating investors to understand how Vanguard’s investing philosophy applies to cryptocurrency.
SPACs: Risks to keep in mind
Learn about SPACs (special purpose acquisition companies) and the risks connected to investing in them.

*Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

For more information about Vanguard funds, Vanguard ETFs, or non-Vanguard funds offered through Vanguard Brokerage Services, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules for full details. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.