The short answer here is yes, Bitcoin and other cryptocurrencies can be valuable long-term assets even for those looking to bolster their retirement account. Bitcoin and other coins are expected to increase in price, gradually at the very least, over the next few decades. As 85% of the world’s Bitcoin supply has already been mined and more vendors are accepting Bitcoin as payment each day, demand is expected to eventually outstrip supply. Despite growing confidence in the future value of Bitcoin and other cryptocurrencies, the assets are still subject to a lot of volatility. Bitcoin is in the nascent stages of its lifecycle its price reflects that with weekly, daily and even hourly fluctuations. Even with all this volatility, it’s possible to save for retirement using crypto if you follow a few simple guidelines.
- Find a Safe Way to Store Your Crypto
Investing in your cryptocurrency safely means a few things. First, you’ll want to purchase coins from a reputable, trustworthy source and may want to use a well-known exchange, like Kraken. Then, you’ll want to carefully choose and secure your preferred storage method. The safest ways to store your coins include cold storage and multi-signature wallets. Cold Storage refers to using a physical storage tool that keeps a user’s private keys secure. This can be a Bitcoin Hardware wallet, designed to keep your private keys safe, or it could be a paper wallet or USB drive stored in a safe. Regardless of your cold storage method, it will eliminate the risk of losing your investment if your exchange is compromised. Multi-signature wallets, on the other hand, are digital wallets that require an additional set of keys to perform Bitcoin transactions. These wallets also help to prevent theft if your API keys are somehow taken. While a secure storage method like these isn’t required — you can always just write down your keys on a sticky note — we highly recommend them to keep your investment safe.
- Commit to a Long-Term Strategy
Committing to a long-term strategy isn’t necessarily as easy as it sounds. While it may sound simple to purchase Bitcoin and store it in a wallet for 20 years without making changes, there’s more to a long-term strategy than just waiting. Instead of going all-in right away, it’s prudent to invest in crypto gradually, over a time period with which you’re comfortable. If you choose to add to your account over time, you’ll have to scan the market for opportunities to bolster your investment with more funds. On the flip side, you’ll also want to watch the market for opportunities to liquidate some of your profits and move them to a more stable retirement account. And it will be vital that you don’t act as a day trader throughout the life of your savings account. To allow your crypto savings to grow sustainably, you won’t want to play speculator and trade based on minor price movements and predictions. Letting your account grow, while periodically rebalancing or adding funds, will serve you well over the lifetime of your investment. If you’re in it for the long haul, treat your investment accordingly.
- Buy the Right Amount for You
This one is pretty simple; don’t buy the wrong amount of crypto. That means, first and foremost, don’t put all your assets in cryptocurrency to save for retirement. Cryptocurrency markets are still developing and volatile, making them one of the highest risk/reward ways to save for retirement. While having a Bitcoin retirement account is a great investment, you shouldn’t depend on it entirely to survive in your golden years. Rather than investing all your money in crypto, invest an amount that could improve your life if the investment grows as projected, but won’t ruin your life if lost. Conversely, you’ll want to invest an amount significant enough to potential to grow into a solid nest egg. That is to say, putting $20 in Bitcoin today will likely not yield a satisfactory retirement account any time in the future.
- Diversify Your Assets
We can’t stress this point enough at LevCrypto. It’s vital for any investor to diversify their assets, as it’s never a good idea to put all your eggs in one basket. In terms of risk mitigation and allowing yourself more chances for success, diversification is a major key to investing. While it’s important to diversify among coins within a cryptocurrency portfolio, here we’re talking about a diversified retirement account as a whole. That means you should save for retirement using a traditional retirement account, like a 401K or pension, bonds, stocks and as much variety in long-term assets as you can manage. A diversified cryptocurrency retirement account should be just one part of your diversified retirement portfolio.
- Guide Your Investment
Guiding your investment doesn’t mean making drastic changes every time there’s a hiccup in the Bitcoin market. Instead, it means ensuring that your investment stays on the right path and continues to fit within your desired strategy over its lifetime. Unfortunately, this is the trickiest part of using cryptocurrency to save for retirement. You’ll have to know when to invest more funds, when to re-allocate, and when to close bad positions before losing too much of your investment. You’ll also need to know how to set up a portfolio geared towards retirement. At LevCrypto, we can help you do all of this, and more, with ease. We help you create and optimize a cryptocurrency portfolio tailored to your desired strategy and level of risk. Then we provide ongoing maintenance to ensure that your investment stays on the right track. At LevCrypto we’re dedicated to helping you become a confident crypto investor, so you can start saving for retirement today.