It could be a move you deeply regret.
Key points
- Many people like to invest in cryptocurrencies.
- Because it is such a speculative investment, it may not be the best fit for your retirement savings.
Although it has been a difficult year for cryptocurrency, many investors are still eager to put money into digital currencies or hold onto the digital currency they bought last year. If you are interested in buying cryptocurrency, it is okay to do so as long as you understand the risks involved and are careful. That means not putting 80% of your money into crypto, but starting small and seeing how it works out.
but if you ask Suze Orman, she will tell you that investing in cryptocurrency for retirement is a really bad move. And it's advice worth listening to.
An asset that is too speculative
You will often hear that it is smart to constantly finance a GO TO for retirement so you have money to draw on later in life. And you don't want to leave your retirement savings in cash. Rather, you should invest that money so that it can grow into a larger sum over time.
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It's also important to maintain a diverse mix of retirement investments. That could help you enjoy profits and minimize losses during volatile periods.
But if there's one asset Suze Orman would warn retirement savers to stay away from, it's cryptocurrency. The reason? It is very speculative.
Crypto has proven to be highly volatile, but so have stocks. But while stocks have been around for a long time, cryptocurrencies have only been around for a little over a decade. And whether it will still be a valuable asset a decade from now is questionable.
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It is easier to determine the value of a certain stock based on information from the company behind it, ie by looking at assets, cash flow, products, etc. of that company. It is more difficult to figure out how much the cryptocurrency is worth and how much it will be worth in the future.
One of the biggest questions surrounding cryptocurrency is whether it will become a widely accepted form of payment. Some merchants already accept crypto payments today. But for the most part, you can't just pay in crypto the way you can hand over a wad of cash or swipe a debit card or credit card.
That makes cryptocurrencies quite risky, riskier than stocks. If the cryptocurrency does not become a mainstream payment option at some point in the future, its value could plummet.
We also don't know to what extent cryptocurrency will be regulated over time. That also increases the risk of possessing it.
Consider cryptocurrency as a short-term asset
As a general rule of thumb, it's a good idea to load your portfolio with quality investments that you've held for a long time. But cryptocurrencies may be the exception to the rule. It may be a better bet to think of cryptocurrency as a shorter-term asset and stick to investments that are more tried and true for your retirement savings.
You will need a considerable amount of savings to cover your living costs after you finish your degree. And you don't want to risk your future financial security by betting too much on cryptocurrency.