Don't Get Burned: Why You Don't Need Meme Coins to Get Exposure to Growth

The stories of people striking it rich with a very small initial investment are intoxicating. But they are just that: stories.

If you're looking for a high-powered investment but aren't interested in taking on much risk, you might naturally turn to some unorthodox investments. Many investors flirt with the idea of buying a meme coin like Dogecoin (CRYPTO: DOGE) or perhaps a newer issue like the Official Trump coin, which is on the Solana (CRYPTO: SOL) blockchain with the ticker $TRUMP.

Stop longingly reaching toward the red-hot stovetop right now, before you get burned. There are much less nihilistic ways to invest your money that offer lower risk and, in all probability, higher returns. Here's why you don't need to take such absurd chances to get exposure to some growth.

Don't even think about playing with fire like this

It is understandable why investors gravitate toward meme coins for a return. The stories of people striking it rich with a very small initial investment are intoxicating. But they are just that: stories.

Consider this chart, and study where the peaks are:

Dogecoin price data by YCharts.

The period when you are the most likely to hear about Dogecoin, or any other meme coin, is during the sharpest ascent of its price. If you buy in then, you will likely experience the sharp ride down that always occurs after all of the remaining marginal buyers on the market have committed their capital. This means that you will then be sitting on steep losses for at least a few years before getting another chance to sell.

But for most investors, seeing 80% losses is precisely the impetus to sell their tokens. Then, much of the time, they simply buy back in when the coin's price starts to go parabolic again -- it's too tempting, and the fear of missing out takes over.

For a coin that immediately commands a huge amount of attention, like the Trump meme coin, the speed of the run-up and the crash afterward can make your head spin.

The more important factor that these meme coins have in common is that there isn't really any credible investment thesis for why it's a good idea to hold on to your tokens for the long term. Dogecoin's price is going to go up a lot at some point in the future, and the same may be true for Trump's coin. But there is no mechanism that drives any underlying value to guarantee that the price rise will actually occur. That's what makes them bad investments -- or, by a more realistic term, gambling.

Thankfully, there's more than one good alternative on the market right now, both within cryptocurrency and outside of it. Take Solana for example.

Everyone who wanted to gamble on the Trump meme coin needed to buy Solana first, since the coin is hosted on Solana's chain. Similarly, there are a huge number of real projects on Solana that drive investors to buy the coin: They need it to participate in minting non-fungible tokens (NFTs), using decentralized finance (DeFi) applications, funding artificial intelligence (AI) agents or their infrastructure, and more.

Holding the coin for the next five years is a smart idea because in that period, there will doubtlessly be more projects launched, more new categories of projects invented, and in all likelihood, more new users and developers.

Eat your vegetables before considering what to have for dessert

Despite the above, there are almost certainly a lot of investors who either already bought the two meme coins mentioned and are still holding them in hopes of a recovery, or who will be unwilling to resist their temptation even when it's easier and more profitable to just buy Solana.

For these investors, practicing harm reduction is the appropriate approach.

In other words, if you absolutely must ignore this advice and dabble in meme coins anyway, at least make sure your financial bases are covered first. You should have an emergency fund set up, as well as a diversified portfolio with a mix of conservative as well as moderate-risk investments. You should also have other, less-risky cryptocurrencies like Solana.

Only once you have attended to those other priorities can it be said that it is not severe financial self-sabotage to invest in meme tokens -- and even then, it will still count as being a moderate sin, so act accordingly if you want your portfolio to grow instead of shrink over time.