Three Reasons Cryptocurrency Is Making Its Way into Retirement Portfolio

Cryptocurrencies represent one of the newest, fastest growing and most intriguing asset classes around. With a rising curiosity among crypto enthusiasts, it is not surprising that more people are jumping on to the cryptocurrency bandwagon as part of their overall retirement portfolio despite its price volatility.

Diversification

Any novice investor would know that investment diversification is one of the basic building blocks of a solid portfolio. It is also is one of the biggest strategies for maximizing exposure to any single asset class, while still allowing for growth. Diversification is the fancy name for the universal advice: Don’t put all of your eggs in one basket.

When planning for your retirement, it is common to invest your savings into multiple mutual funds — some for growth, some for income. Your allocation to each of these broad categories should be based upon your investment goals, your tolerance for risk, and your time horizon for needing the use of the money.

So, if you view cryptocurrency as an intriguing new asset class with a plethora of potential, it only stands to reason that you should consider including it in a diversified portfolio.

Decentralised Nature

One of the characteristics which fuel its growth as an attractive form of alternative currency is that it is a famously decentralised cryptocurrency, which allows near instantaneous transfers all over the world without a middle man or a regulatory body giving it the go-ahead.

This same consideration applies to cryptocurrency from an investment standpoint. In general, cryptocurrency is largely immune to the impact of such changes by the government. In this regard, it is regarded as a contrarian asset class, much like gold, which can move in the opposite direction of prevailing markets. This also adds credence to its use in diversification.

Long-Term Growth Potential

Veteran cryptocurrency investors know this to be a fact, but the volatile nature of cryptocurrency is a two-edged sword. And, as with any volatile investment, what can be good for your pocketbook over the long haul can be bad for your heart in the short term.

In conclusion, only you can answer the question of whether cryptocurrency is a smart investment for your personal retirement goals. In other words, to each, his own.

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