Bitcoin has been on a wild ride, and it has taken me along with it.

After starting out the year below $1,000, the cryptocurrency just hit the $11,000 mark. A couple months ago, I had enjoyed only three days of that upward climb, but I’m glad I got out of the currency when I did.

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“The idea of making quick money was exciting, but when it actually worked, I was scared senseless.”

Here’s what happened. In September, China’s bitcoin exchanges halted local trading, causing the price of bitcoin to drop almost 25% in value over the course of just two weeks. When the initial news from China was announced, it had pricked my ears. Bitcoin had been going up for a period of time, but then had suffered a quick decline. In my limited knowledge, I thought I could make a prudent investment as I guessed this was going to be a quick blip in this cryptocurrency’s history.

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I took several thousand dollars from my savings account and invested it in bitcoin using the Coinbase app. It only took a weekend of insane returns — a 780% annualized return — for me to realize that this was a very bad idea, indeed.

I was making money hand-over-fist, and I couldn’t sleep. The idea of making quick money was exciting, but when it actually worked, I was scared senseless. It showed me the difference between appropriate investing and wild speculation.

It only took me three days to take my money out again and put it in my savings account. I made a few hundred dollars, but after going through the process, I swore off investing in something I don’t truly understand. If I had left my money alone, I would have made thousands of dollars by this point, but most likely would have been a nervous wreck. And I’m one of the lucky ones — I made money during this period. If I would have lost money, I would have been angry at myself.

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“Investing should be boring and well understood.”

When looking at this return, and the gains that have happened since that time, it became clear that emotions were driving my decision to invest, rather than a complete understanding and review of the fundamentals. As we all know, that’s the worst way to invest. For my clients who are talking about this, this will be one of the main things I will try and discern: do they have a complete understanding of the underlying platform and cryptocurrency, or are they just afraid of missing out on returns?

Investing should be boring and well understood. My experience was the complete opposite — I invested in a complex product that would require hours for me to fully understand, and it produced returns that were speculative in nature.

An appropriate investment should not show minimal returns for years and then increase three-fold in a matter of months. That was enough for me to remove this as a viable long-term investment. While some investors — in this case speculators — might be OK with this risk, I am not, and I imagine most of my clients, mostly baby boomers, are not either.

Before I ever suggest cryptocurrencies to my clients in the future, I’ll need to spend much of my time researching the various tranches of this space. At this time, that’s not something I see value in doing. I’m lucky that my clients are conservative in their approach, because for me, any form of cryptocurrency has no place in a Main Street investor’s profile.

Dave Grant

Dave Grant

Dave Grant, a Financial Planning columnist, is founder of Retirement Matters, a planning firm, in Cary, Illinois. He is also the founder of NAPFA Genesis, a networking group for young fee-only planners.