It is difficult to not see the news without seeing something about cryptocurrency. Many investors are rushing their funds into cryptocurrency in a drive to join the ranks of people who have gotten wealthy by owning digital gold. And soon, you could also have the ability to invest in cryptocurrency for your retirement.

401(k)s and cryptocurrency?

Today’s 401(k) programs do not include the ability to invest in crypto. But this could be about to change.

ForUsAll Inc., a 401(k) company, announced this month that it is working on a deal with Coinbase that will allow their customers to invest up to 5% of their 401(k) into cryptocurrencies such as Bitcoin (BTC).

Now just because a single 401(k) provider will give cryptocurrency does not mean every provider will do so. But with the popularity of Bitcoin, there is a good chance more will start to consider adding cryptocurrency into their offerings.

Should you use your retirement account for cryptocurrency?

Whether it pays to invest cryptocurrency using your 401(k), that is a different matter. Though many people have gotten wealthy from cryptocurrency, it is also very unstable, and a speculative investment.

The long-term value of these digital currencies will depend on how much they are accepted as payment going forward. Right now, you can not spend Bitcoin in your average supermarket.

It is hard to predict what could happen soon for Bitcoin and other cryptocurrencies, it is a risky investment for your 401(k) — mainly the chance it could be worth nothing in 20 years.

In fact, many people who purchase cryptocurrency do so on a near-term basis because they understand its future is unstable. But your 401(k) should be focused on long-term wealth-creation, especially if you are relatively young and you are not retiring for many years.

The ForUsAll plan will only allow participants to put up to 5% of their money into cryptocurrency. And that is related to its speculative nature.

Author: Steven Sinclaire

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