Ethan Nguonly, a 22-year-old software engineer, began investing in the stock market with the guidance of his parents before he even reached his teenage years. Today, his investment portfolio includes close to $135,000 in retirement and brokerage accounts, as well as ownership of two houses.
However, Nguonly reveals that his journey to financial success was not without a significant misstep.
Nguonly in an interview with CNBC disclosed that between November 2021 and June 2022, he faced losses of approximately $80,000 due to his involvement in margin investing with cryptocurrencies. This figure encompassed $30,000 of his original investment capital and an estimated $50,000 in unrealized gains.
Margin investing is a strategy that allows investors to borrow funds from a broker in order to increase their buying power and investment capacity. By leveraging borrowed money, investors can potentially amplify their returns if their investments perform well. However, it’s important to note that margin investing also increases the risk of losses, as any downturn in the market can magnify the impact on the borrowed funds
Despite already having invested around $40,000 in prominent cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), alongside a few hundred dollars in altcoins like Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE), he decided to venture further. He chose to invest an additional $15,000 on margin, hoping to capitalize on Bitcoin’s price surge.
Nguonly experienced a brief moment of success as the value of Bitcoin soared, stating, “I was up about $50,000 as the price of Bitcoin reached its all-time high.” However, towards the end of 2021, the cryptocurrency market took an unfavorable turn, resulting in Bitcoin’s price plummeting by over 70% by the summer of 2022.
Learning from his $80,000 mistake, Nguonly now advises others to exercise caution, stating, “Only invest money you have and don’t go un-leveraged into very speculative investments.”
Nguonly still retains some investments in cryptocurrencies, primarily focusing on Bitcoin and Ethereum, while avoiding altcoins.
Produced in association with Benzinga
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