Experts Advise Teens to Take a Careful Hands-On Approach When Learning About Crypto Investing

Today's financially savvy teens are thinking a lot about cryptocurrency, blockchain and NFTs.

Many are curious about how they should start investing in the often-volatile asset class.

Experts say that new investors don't need to shy away from cryptocurrency but should educate themselves on the asset class and take the necessary precautions to be protected from volatility.

"I say dive right in, but dive right in with the appropriate amount," said Brian Kelly, founder and CEO of BKCM, LLC during CNBC's Thursday event, "Money without Borders: A Virtual Summit," a collaboration between Invest In You and Junior Achievement.

More from Invest in You:
Joint vs. separate accounts: What couples need to think about
Want to find financial success? Here's how to get started
Before buying a house, here's how to set yourself up for success

How much to invest

Because cryptocurrencies are much newer than other assets such as stocks and bonds, investing in them carries different risks, he said. To balance this risk, Kelly suggests making crypto investments a small part of the total money you put into the market.

"What I've always said to most people with an investment portfolio is take 5% or less of what you'd invest in stocks or bonds and put it into crypto," he said. This way, if cryptocurrency doesn't end up being a winning bet, you're protected from extreme loss.

"It's going to hurt, but it's not going to change your life," he said.

On the flip side, if cryptocurrency does grow exponentially, that original 5% could become a major part of your portfolio, he said.

"Just like any other investment, it is really about your position size and risk management," he said. "Where people make mistakes is they just get too big because they want to try to get rich quick."

Other experts say to only invest what you're willing to lose.

"Never ever, ever, ever put in more money than you feel comfortable losing to something that you don't fully understand or that has large volatility," Sam Bankman-Fried, CEO and co-founder of FTX Group.

How to start investing

Once you've determined how much money you'd like to invest in cryptocurrency or NFTs, you should take time to fully understand the assets.

Part of that is trying out different products and platforms, according to Bankman-Fried.

"It's really hard to have a deep understanding of what cryptocurrencies are, what NFTs are, what platforms are, what exchanges are, what blockchains are and what wallets are if you haven't used them," he said.

He suggests opening a few different accounts at different places with small amounts of money for testing purposes. Then, use all the available features in the accounts to get a real sense of what it means to hold different assets, buy and sell and even send a transaction on a blockchain.

"That is ultimately going to teach you a lot more about how the space works than any amount of talking or reading can do," he said.

The power of cryptocurrency

Something that experts find exciting about the future of cryptocurrency and other digital assets is how they are changing the landscape of financial services by extending access to groups that have traditionally been left out.

"We've seen the grassroots movements that actually have propelled cryptocurrency and that's why you've seen communities that've been left out of the traditional financial system able to participate," said Cleve Mesidor, executive director of the Blockchain Foundation.

Asian, Black and Hispanic adults are more likely to say they've invested in or traded cryptocurrency, according to Pew Research Center.

"Those who are left out are embracing this new currency," said Mesidor. She also said the conflict in Ukraine has shown how cryptocurrency can be a helpful tool for the victims of war, who are unable to access the money they've stored in home institutions but could get cryptocurrency.  

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.

CHECK OUT: 74-year-old retiree is now a model: 'You don't have to fade into the background' with Acorns+CNBC

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.