Some of the most startling survey results have found that 33% of those 65 and older put more than 25% of their money in cryptocurrency, and 22% of those in retirement use cryptocurrency to supplement their retirement income. Moreover, one-third said they earned $5,000 or more from cryptocurrency investments.
Is cryptocurrency, however, a viable source of income for retirees? Here are perspectives from industry professionals on both sides of the debate.
Over the last decade, cryptocurrency has made such a mark in the investing world that it has sparked nothing short of a frenzy. The headlines are enough to entice investors when an investment like Shiba Inu can grow 49 million percent in a single year, as that cryptocurrency did in 2021.
Many analysts believe that investing in cryptocurrencies is suitable, even for retirees. The possibility for outsized returns, as demonstrated by Bitcoin’s quadrupling in 2022 and Shiba Inu’s amazing growth in 2021, means an underfunded retirement plan might benefit from a crypto investment.
Recognizing that the dollar cost average is a deception
Buying on a daily, weekly, or monthly basis originated in the stock market. This is a good tactic over there because cryptocurrency values are quite volatile. So the dollar cost average at its peak ultimately makes no sense in the crypto industry.
Tip: If you’re averaging dollars, check out the monthly bitcoin chart. On the 21-month moving average of the indicators, try to only buy tiny percentages on red days, which are days where the price action is lower than on other days. This will eventually ensure that you are purchasing at the greatest possible time rather than the worst possible time. And you’ll be simply purchasing in the bottom half of the price action rather than the entire range.
Limiting the number of trades you make in a given year
In practice, there are just a few times during the year, maybe twice a year, when you should be genuinely buying or selling. Overtrading raises emotions, leads to poor judgments, and eventually keeps you working 24/7.
A well-diversified retirement plan may profit from a minor allocation to cryptocurrency, which may or may not move in correlation with other markets as it matures. In summary, although risky, a small allocation to cryptocurrency in a retirement plan may give benefits in terms of diversity and upside potential.
You should therefore restrict your allocation even if you have a high-risk tolerance and can afford to lose money on your crypto investments.
Undoubtedly, the most significant disadvantage of investing in Bitcoin for anybody, especially retirees, is its volatility. Whereas younger investors have time to increase their earnings and savings in reaction to a significant market loss, retirees do not have that luxury in terms of time or salaries. As a result, retirees should only invest in bitcoin with money they can afford to lose.
Another drawback is that bitcoin has no long track record on which to base predicted profits. The stock market, for example, has been around for many decades.
Furthermore, its various portfolio of businesses creates verifiable revenues and earnings based on stock values. In contrast, cryptocurrency is now dependent on aspirations and ambitions and how much the next investor is ready to spend. As a result, it isn’t easy to view it as a stable or predictable source of retirement income.
At the outset, even though crypto may not be an ideal investment for retirees who require stable assets that generate regular income throughout their non-working years. However, there are always exceptions to any rule. If you have enough money set aside for retirement, there’s no reason you can’t dabble in Bitcoin to attempt to make some huge money.
Crypto is not your place if you can’t afford to lose even a little portion of your retirement assets. However, if you have enough to live on and only want to boost your profits, well-picked crypto investments that don’t take up too much of your portfolio might be acceptable.
Before setting foot in the crypto world, It is recommended to consult with a financial advisor to properly understand the dangers and benefits of cryptocurrency and determine whether they match your investment objectives and risk tolerance.