Cryptocurrency for Retirement Planning? Buy These 2 Coins Now
New ETF investment products are making it easier for investors to add cryptocurrency to their retirement portfolios. Bitcoin and Ethereum have established track records of delivering incredible returns, as well as attractive future growth prospects.
Cryptocurrency in retirement portfolios
Given the risk and volatility involved, investors saving for retirement should allocate only a tiny portion of their portfolios to crypto.
Bitcoin
The no-brainer crypto investment option is Bitcoin, which has an incredible track record of outperforming the broader market. From 2011 to 2021, for example, Bitcoin was the top-performing asset in the world, and it wasn’t even close. Bitcoin delivered annualized returns of 230% per year. The next best asset class – tech stocks – delivered just 20% per year. While that type of performance will be difficult to replicate going forward, Bitcoin delivered returns of 150% last year, and is up 60% through the first five months of 2024.
Bitcoin’s impressive growth
“Bitcoin delivered annualized returns of 230% per year.”
Ethereum
Just like Bitcoin, Ethereum has delivered outsized returns over the past decade. When Ethereum launched nearly a decade ago, it was valued at just $0.30. Today, Ethereum is valued at nearly $4,000. Of course, past performance is no guarantee of future returns, so the key is to focus on Ethereum’s future growth prospects.
Ethereum’s impressive growth
Does Crypto Belong in Your Retirement Portfolio?
Admittedly, there are several drawbacks to adding cryptocurrency as part of your retirement portfolio. Most importantly, there’s the matter of volatility. Yes, Bitcoin and Ethereum have delivered some incredible returns over the past decade. But they have also had some very bad years when they lost more than half of their value. That’s the last thing you want in a retirement asset.
With that in mind, the most prudent advice is to allocate only a small amount of your retirement portfolio to crypto. You’ll gain the diversification benefits of crypto as a unique asset class, but you’ll minimize the risks of a potential crypto meltdown. And, to minimize risk even further, you should probably focus on using the new spot ETFs for Bitcoin and Ethereum rather than trading crypto directly.
Diversifying your portfolio with crypto
