Cryptocurrencies are quickly becoming more and more popular, with some also considering them good investments for retirement. This is a risky plan, because the crypto market is very risky and you don’t want to take those kinds of risks near retirement.
Bill Schantz Explains If Crypto is a Good Investment
Cryptocurrencies have become a huge deal, and while we think of the large returns Bitcoin has seen through the years, there have also been massive dips. According to Bill Schantz, while Bitcoin has definitely been successful, with investors making huge returns, the other thousands of cryptocurrencies haven’t necessarily done so well.
Bill Schantz expects that a fair portion of millennials assume that crypto returns will be much higher than stocks, mutual funds or real estate, despite a fairly large part of the group not actually understanding how cryptocurrencies work and acknowledging that they find it risky and confusing.
While cryptocurrencies are a novel asset, they are also very volatile and risky, and may not be the best type of asset to include in your retirement funds.
What To Consider For Retirement Investments, According to Bill Schantz
When you’re picking out assets for your retirement fund, you should keep some things in mind:
The growth rate is very important, because the returns you’ll make on the investment relies heavily on what the expected growth rate will be. Financial experts use a number of models and many years of data to predict growth rate accurately, but this becomes much more difficult with cryptocurrency.
The total level of risk and volatility is also important because this gives you an idea of how much you can lose if the market happens to dip. Based on this, you can decide whether you want to invest or not. With cryptocurrencies, their volatility is already much higher, but there are also fewer and trickier ways to measure their risk.
Having a consistent cash flow is necessary, especially in retirement. Here, cryptocurrencies have an edge over other assets because their cash flows remain constant due to staking and yield farming, but there is no way to tell if this is temporary or not.
According to Bill Schantz, new doesn’t always mean bad, but you have to be very careful about where you put your retirement money since that’s what will get you through life once you’re no longer part of the workforce.
Bill Schantz explains that while cryptocurrencies may fit into your retirement strategy to some extent, they shouldn’t make up a large portion of your retirement fund because of how volatile and risky they are. The returns you can make on them can be very high, but there can also be great losses.
At the end of the day, your retirement fund should be carefully put together using a diversity of assets that have various levels of risk tolerance and are expected to grow in the future. In this case, cryptocurrencies may not be a bad idea.