Cryptocurrencies have emerged as an alternative to traditional investment classes but are they suitable for retirement funds? Some experts have weighed in and shared their opinion.
Cryptocurrency retirement plans and portfolios are growing. In the United States, an increasing number of financial technology companies and institutions are now offering crypto 401(k) or IRA products. These are the two main methods Americans can save for retirement. Therefore, in this article, you’ll discover two examples of investment alternatives.
1) Alpha Wealth Group is Adding Cryptos to their Portfolio
There was $22.5 trillion tied up in these plans in the U.S. as of mid-2021. Therefore it represents a huge emerging market for crypto investments.
For example, WGN Radio’s Ilyce Glink and Tom Fortino from Alpha Wealth Group shared their views on crypto retirement plans earlier this week. Here is an example of how an Australian retirement fund is diversifying its investments:
NEW: $46.8 billion Australian retirement fund open to investing in crypto in order to diversify investments pic.twitter.com/doyJN7v5v1
— Blockworks (@Blockworks_) November 24, 2021
While crypto is still high risk and extremely volatile, long-term gains for leading assets have far outpaced traditional investments. Therefore, Fortino admitted to being more of a gold investor as it has a limited supply and acts as a store of value.
Moreover, Bitcoin has the same properties but can be sent across the world in seconds, unlike gold. So, Fortino said he wasn’t fully convinced with BTC but investors can profit from it:
“But as an investor, if you bought Bitcoin for $10,000 and it’s now over $40,000 and even reached up to $70,000, then I say it’s a good investment. Can you trade it? Sure. Can you make money out of it? Sure.”
Therefore, it would make reasonable financial sense to allocate a portion of a retirement fund to cryptocurrencies.
2) Gemini Published a Crypto Retirement Plan Guide
The Gemini exchange has published a guide to crypto retirement plans and pensions. It reported that Bitwage launched the world’s first Bitcoin 401(k) offering in March 2021. Another 401(k) provider, ForUsAll, also allows clients to invest up to 5% of their pension contributions in cryptocurrencies.
The report stated: “Investing in bitcoin and other cryptocurrencies for retirement can be a good diversifier and may enhance your investment returns.”
However, it also noted that some providers have high fees, commissions, and potential tax implications on crypto-related retirement products.
On the other hand, in the tweet below, you can see another example of how firefighters have relief a $25 million crypto retirement fund:
Houston Firefighters’ Relief and Retirement Fund invested $25 million in crypto in what appears to be a first for a U.S. public pension plan. https://t.co/K5xdElV95Z
— Josh Caplan (@joshdcaplan) October 21, 2021
Self-Manage your Own Crypto Investment Fund
For those that are more disciplined with money, there is the option of self-investing. Furthermore, you’re cutting out the middleman, fees, and charges this way and buying and holding crypto directly.
Cryptocurrencies have a bright future and have now emerged as an asset class of their own. The market is still tiny compared to traditional assets at just $1.9 trillion in market cap. Therefore, there is a lot of room to grow, especially over the long term when things like inflation are considered.
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