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I’m grappling with crypto at the moment. I’ve opened an account with eToro with a plan to make a $20,000 investment/gamble with the simple idea of leaving it for the next 10years to see what happens. I personally don’t recommend this unless you’re happy to lose your shirt.
With crypto in my mind I was interested to read an article this morning about how your President Trump has just signed an executive order that could change things up. It seems he’s directing federal agencies to make it easier for retirement plans to include alternative assets like crypto and private equity.
It seems to be a big shift from the previous administration’s approach. Supporters say it gives more choice and a shot at higher returns. But critics warn it’s a risky move, exposing everyday savers to the wild swings of the crypto market
I’m assuming it will take a while to happen. But the question begs to be asked: Is this a smart way to supercharge your retirement, or a dangerous gamble? What do you think?
My view is that crypto should be treated as a long term gamble with money you can afford to lose. I’m really not sure of it being a suitable position in someone’s retirement account. Would a financial advisor even be able to square this with the duty to advise in the client’s best interests? I think it could probably expose them to possible lawsuits. It seems like a new can of worms is about to hit the ground. Any thoughts?
I’ve been in bitcoin for 12 years and it’s the single smartest thing I’ve ever done.
I subscribe to the greater fool theory and don’t need to understand it. So long as BTC’s supply is finite and population expands, the odds are it will get more expensive. Being uncontrolled by any person or country is a plus.
I read somewhere at everyone should have (notice I did not ‘invest’) 2% of their portfolio in crypto.
So I did that. In my well diversified portfolio, it has become my single largest holding and will probably remain so.
IMO, a Bitcoin ETF such as IBIT provides easy, safe exposure. The better you understand Bitcoin the less speculative it will seem. Ric Edelman is a good resource for those who want to know more. A simple YouTube search will provide helpful information.
Bitcoin, not crypto.
From my non-expert perspective I agree that BTC is the ‘gold standard’. Once BTC ETFs became ‘legal’ I moved my bitcoin related holdings to IBIT.
Some additional thoughts / comments:
Please elaborate on your comment that “The better you understand Bitcoin the less speculative it will seem.” I understand it a bit. My impression is that bitcoin as a technological tool, or underpinning of potential future and evolving tools, is real – but that as an investment Bitcoin and other crypto is pure speculation; and that if people are honest the only reason people invest is stew of FOMO and the human fantasy of being able to get rich quick,
My neighbor wants to take the gamble (his words) and invest $100K to start. His Financial Advisor said that would be okay, but nothing more. One of his former junior coworkers did well and retired before he was 30.
Like others, I don’t know enough about it and wouldn’t know where to begin to understanding it.
Gambling is never a good idea with hard earned savings. If you do not understand it, do not do it. For now. Take the time to become sufficiently informed to make well-reasoned decision.
I’ve spent years of study, and as a result been a long-term holder of Bitcoin for five years. It’s been a great decision, for me. I don’t see any reason why others would not come to the same conclusion after sufficient study. Do your own research.
Question/comment deleted. Found what I was looking for.
I imagine many have done very well investing in crypto, some out of luck and others perhaps due to skill. And many may do well in the future with crypto. Good for them! Buffett and Munger used to say they invest only in those businesses which are “within their circle of competence”. I don’t understand crypto myself, so I’ll follow their reasonable advice. Forget about FOMO.
Same here, Jack. I don’t understand the stuff, and to me the volatility isn’t worth the risk. Especially to my stomach lining.
I have a suggestion, Mark: Skip the crypto psychosis.
Instead, from your nearest bank branch, withdraw a stack of 200 new £100 notes (or €100 if appropriate), locate your favorite lighter, and apply lighter to notes. It will be far more entertaining and equally profitable.
Better still: with the 20k buy a round for everyone at your favorite nearby pub, once a month for the next year. You’ll retain lasting gratitude and high esteem from your friends and neighbors at a similar sunk cost.
I appreciate the suggestions, but burning cash and buying rounds got me thrown out of the bar last week. This week, I’m conducting a 10-year fool’s experiment on the nature of the speculative asset bitcoin. Is it a gamble? Absolutely. But unlike a pub round, the results will either be a fascinating case study in financial absurdity or, on the off-chance I see a profit, a surprisingly good article on the future of decentralized finance. But I still wouldn’t want crypto in a retirement account you depend on for retirement.
I think 1-2% max.
Here’s my perspective: Bitcoin is built on blockchain technology, and I’m a strong believer in its potential. I invested in BLOK, which is a concentrated ETF that focuses on blockchain companies. My understanding is that Bitcoin is essentially software, meaning there are likely unlimited similar products possible, which may not make it a good long-term investment. In the first couple of years, I experienced losses with BLOK, but I’ve seen positive returns recently. The volatility has been exhilarating, and I’m glad that my investment was a small one.
You’re basically paying for a very long integer when you buy any crypto. Why we think those are worth our hard-earned cash boggles the mind. Not a Humble investment.
Blockchain ledger tech is indeed useful. That does not necessarily make it a good investment. Unless you’re into cybercrime or money laundering.
Much like going to the casino……..
I think that can hit the ground yesterday and the worms are going nuts. Good post Mark.
I think you probably have the right idea at least as it goes for retirement assets. Regard it as play money or a long term lottery ticket and then it’s no harm if it crashes to zero or the platform holding fails in some way (& Crypto exchanges themselves are definitely a no-zero risk in all this).
I know some people who claim to make steady profits on crypto – buy on the dips, sell at new highs. What that doesn’t really factor in is the liquidity risk when everyone runs for the door at once. Nor the risk that they get suckered in and no longer limit their position by selling periodically and keep adding to it – after all it always goes up.
Would I feel differently if I’d been in relatively early and sitting on $100k+ for not much initial stake? Quite possibly, but I hope I’d have been clear minded enough to at least take out my starting capital along the way so it could ride as a punt.
With businesses’ fiduciary responsibilities I would be shocked if they adopt crypto as it would put them at risk of being sued. Private equity I could see. I just wonder with their lack of liquidity how the plan would be able to liquidate if there were a rush to dump it by their employees.
One of my first investments outside of CDs was in a REIT. The advisor (salesman) told me it was an investment used by pension funds, and would provide steady and conservative growth. I watched that sucker go down every month, and there was no buyer available when I wanted to bail out.
I have always thought crypto was ideal for money laundering and nothing else. Why put money in an unregulated investment that has no asset base?
I don’t see it as a investment. It’s quite simply a speculative bet over a long time frame. I’m throwing the dice and leaving it to time,fate and luck.
I totally agree with you. I like my investments to have cash flow.