Even though cryptocurrency has a reputation for being risky, people of all ages still want to buy it. That's what a recent survey of 1,037 investors did.
Some of the more surprising things that came out of the survey were that 33% of people over 65 invested more than 25% of their money in cryptocurrency and that 22% of people who are old enough to retire use cryptocurrency to pay for their retirement.
More than a third of them also said they had made $5,000 or more from their crypto investments. But can people who are retired depend on crypto as a way to make money? Here's a look at the sides of the issue from the point of view of experts in the field.
Perks of Cryptocurrency as Retirement Income
In the last ten years, cryptocurrency has made such a big splash in the investment world that it has caused nothing less than a frenzy. When crypto like Shiba Inu can go up by a crazy 49 million percent in a single year, as it did in 2021, the news is enough to get a lot of people to invest.
A March 2022 poll found that 55% of Americans ages 18–29 and 53% of Americans ages 30–49 think cryptocurrencies will become a major economic force. Those are incredible numbers for a type of asset that didn't even exist until 2009.
Many analysts think that even retired people should have some of their money in cryptocurrency. Because there is a chance for huge gains, like Bitcoin's quadrupling in 2022 and Shiba Inu's amazing 2021, an underfunded retirement plan could get a boost from investing in crypto.
Even if a retirement plan is already well-diversified, adding a small amount of crypto, which may or may not trade in the same way as other markets as it grows, could be helpful. In short, putting a small amount of money into crypto in a retirement account is risky, but it could be good for diversification and growth.
Even if you like taking risks and can afford to lose money on your crypto investments, you should still limit how much you invest. "Below 1% is too small to matter much," says the chief investment officer of Bitwise Asset Management. "Above 5% significantly increases risk," he says. But each person should make their own choice."
The Bottom Line
At first glance, crypto doesn't seem like a good investment for retired people, who usually need safe investments that can give them a steady income during their time off. But there are always things that don't fit the rule. If you already have enough money saved for retirement, there's no reason you couldn't try to make a lot of money with cryptocurrency. But you must go into it with your eyes open and know that cryptocurrency is based on speculation.
You don't want to invest in crypto if you can't afford to lose even a little of your retirement savings. But if you have enough money to live on and want to make more money, carefully chosen crypto investments that don't make up too much of your portfolio can be a good choice.
It is more important than ever to speak with a financial adviser so that you can fully grasp cryptocurrency's risks and benefits and determine whether or not they align with your investment objectives and risk tolerance.