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Can Crypto Investments Be Considered for Retirement Benefits

Cryptocurrencies
Cryptocurrencies

The usual question for financial advisors from the clients is about retirement benefits from the investment they make in their earning stage of life. Nowadays, with cryptocurrency in the market, everybody wants to know whether a long-term investment in this sector is beneficial.

Crypto's Financial Capital

One of the latest crypto-related exchange-traded funds debuted in October is ProShares Bitcoin Strategy ETF, which opened its doors for investors. The ETF transacts Bitcoin futures and contracts, which increased in a short span with more than $1 bn assets. A month-old fund has a daily trading average volume of about 5.2 million shares. Investors are getting updates about crypto and are attracted to it.

Different from traditional assets

The major difference between traditional equity and fixed-income assets and crypto is volatility, where the rates fall or may soar steeply in a much short time than stocks. But the investing rules remain the same. While talking about retirement accounts, the advice circulating is still focused on trading rather than on a long-term plan.

One of the experienced economists opined that investors do not invest solely in income-producing assets like a retirement account. They can invest a portion (maybe a majority) into growth-oriented investments, a combination of stocks and bonds with digital assets. This may improve overall portfolio returns while less loss in the worst scenario. He also suggested Bitcoin has the best past performance, so as little as 1% of one’s account can be invested in it without any risk.

Risk in Futures Contracts

The Future Contracts are inherently risky investments but with a learning curve, unlike mutual funds, which are highly risky with aggressive growth, says Smith, another finance expert. He also suggests his clients not invest in IRA related to Futures Contracts and has the same opinion to invest only a portion of their portfolio to crypto.

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