It’s hard to look at the news these days without cryptocurrency rubbing you in the face. Talking about cryptocurrencies and social media is booming. Celebrities, billionaires, and digital-asset enthusiasts are all dabbling in the crypto craze.
It doesn’t stop there, many investors are putting money into cryptocurrency and soon you might have the option to invest in cryptocurrency for your retirement. Yes, you read that right! You will now be able to invest in cryptocurrency in your 401(k).
But should you jump in on the crypto-mania too? Well, that depends on how much you can tolerate volatility in your investment portfolio.
Is Crypto Going Mainstream With a 401(K) Offering?
Some 401(k) savers will soon be plunging a portion of their nest eggs into cryptocurrency. And this is only the beginning of a crypto investment as a retirement strategy. But it is too early to tell whether this will be an industry-wide turning point or a temporary on-trial phenomenon.
ForUsAll Inc., a 401(k) provider, announced earlier this month that a deal has been made with the institutional arm of Coinbase Global Inc., a leading cryptocurrency exchange. This will allow workers to invest up to 5% of their 401(k) contributions in Bitcoin, ether, and others.
Are Cryptos Right for You?
Looking at it from a long-term point of view, the value of digital currencies solely depends on how widely they are accepted as a form of payment.
Presently, you can’t exactly walk into a supermarket and pay for groceries with crypto. Cryptocurrencies are volatile and unpredictable and because it’s hard to predict what the future holds for cryptocurrencies, it can be a risky investment for your retirement.
To be honest, there’s a good chance it will be worth absolutely nothing in the next 10, 20 or 30 years. That is why people who buy cryptocurrency do so on a short-term basis because its future is shaky.
But since your 401(k) is centered on building a long-term wealth strategy, don’t pile all of your nest egg into volatile cryptocurrencies, as they pose a big risk to your retirement. Going by the latest news, Dogecoin has seen booms and swoons in a short time interval.
If you’re a first-time investor, ensure to proceed with caution. These investments are speculative for amateur investors and can cause some extreme financial swings.
Also Know About : Read this before you start making investments
What Are the Risks?
Well, we’re all aware that there’s no such thing as a risk-free investment. Cryptocurrency and risk-free are just miles apart, in fact, it is a lot riskier than putting money into stocks.
Cryptocurrencies like Bitcoin are only a little more than a decade old and we don’t know how much staying power it or other digital currencies have.
But if you’re still contemplating on whether to board the crypto train or not, here’s something to consider: follow the 5% threshold, it might be a good start. Ease your way in, it is a better bet than going all in—and risking losing all your money in the process.