Cryptocurrency is among the latest phenomena inside the investing world, and some investors have made millions from it by investing early.
Over the last year, the value of Bitcoin has gone up by over 300%. Despite having fallen over the previous couple of months, its price is increasing yet again — making it an appealing possibility for people looking to jump-start their retirement.
Because Bitcoin has experienced this explosive growth, it might be tempting to put all of your life savings into the cryptocurrency in order to retire wealthy. But is this really the right move?
Is Bitcoin a good retirement option?
For most investors, personal savings will are the majority of their income within retirement. Social Security benefits were created to replace only about 40% of your income, and unless you get access to a pension or another source of income, the rest will have to come from savings.
And since you’ll probably depend on your savings in retirement, it’s crucial that your investments are stable. For this reason, retiring on only Bitcoin alone can be very risky. Bitcoin is known for its volatility, and it’s even went down over 80% in value at one time. While everyone has a different acceptance of risk, few retirees could sleep knowing their savings would possibly plummet by 80% or more in a short duration of time.
How to Invest in Bitcoin and keep your retirement safe
If you are eager to get into cryptocurrency, there is nothing wrong with that. But there are safe ways to do this that don’t involve risking your financial future.
First, make sure you are investing only the small portion of money that you can afford to lose. Exactly how much you put in will depend on your financial circumstances and risk tolerance, but it should not be so much that you will struggle to pay your bills if you lost your whole investment.
Next, check that your entire portfolio is well diversified. By spreading your money among many stocks and multiple industries, your entire portfolio won’t be as affected if Bitcoin does not perform well.
Finally, invest in Bitcoin only if you think it has long-term possibility. Investing is not a “get rich quick” plan, and it’s almost impossible to bring in millions with just one investment. But if you believe Bitcoin has a good long term value and are willing to keep your investments for decades or years even with volatility, you could make a lot of money doing this.
Author: Scott Dowdy