Is It Safe For Retirees To Invest in Cryptocurrencies?
If you are retired and have developed an interest in investing in cryptocurrency as a way of providing some extra funds, you may be wondering just how safe it is.
On the surface, cryptocurrency can seem like a good addition to your investment portfolio, as well as a useful tool for various online transactions.
For one thing, cryptocurrencies offer anonymity and security when making a purchase. In addition, transaction fees are lower than with other payment methods, and because cryptocurrencies are decentralised and self-regulated, you can store them in your own crypto wallet rather than having to open a bank account. You can also manage your funds yourself.
When it comes to investing in crypto, however, the fact is that this kind of currency can be a great risk, as they are famously volatile. So, as a retiree, should you invest in the likes of Bitcoin or would you be better off steering clear? Read on to find out more.
Can you handle the volatility?
One of the main reasons many analysts will give for avoiding investing in crypto as a senior citizen is how volatile these digital currencies are. Casting a quick glance back over the crypto market’s peaks and troughs of the last few years will give you a clear picture of this significant volatility, which can greatly impact the value of any currency. If these dramatic highs and lows worry you, then crypto probably isn’t the right investment option for you.
Consider your budget
When it comes to deciding whether or not to make crypto part of your retirement investments, one of the most important things to take into account is your budget for daily living.
If you have other sources of income to rely on, then the volatility of cryptocurrencies will not be as much of a threat, and proceeding with a tentative investment could be a good idea.
If your allowance for day-to-day living is more limited, however, then investing in Bitcoin or other cryptocurrencies should perhaps be avoided – even if you only plan to buy a small amount.
No one knows what the future holds
Because cryptocurrency is still a relatively new addition to the financial landscape, the market is in a constant state of development. Different countries have taken different approaches to their adoption of crypto, and many laws and regulations surrounding the usage of crypto are still to be finalised.
At this state of infancy makes it difficult to predict what developments could unfold over the next decade or two. Changes could be made that are potentially damaging to your retirement plan, which, after all, should be a secure long-term plan that provides for you for the rest of your life.
Buy with caution
If you do decide to take the plunge, financial experts recommend that you only make cryptocurrencies a very small addition to your financial investments because you never know when their value will plummet.
Between 1% and 5% is recommended; buy any more than this and you could find your investment loses value rapidly if a new crypto winter takes hold.
Once you’ve taken all of this information into account, it’s up to you how to proceed, but, at the very least, the advice is clear: invest in crypto cautiously, if you invest at all.