(MoneyHippo.com) – Cryptocurrency is a relatively new investment possibility, and many people in the younger generation are using it in their portfolios. Younger investors tend to be more bullish on the trend, even leaning on it for their future retirement, but is that wise?
Cryptocurrencies are one of the riskier investments a person could choose as a means to generate future wealth due to their wide fluctuations over their existence. Yet, assets that carry the biggest risks may hold the most significant rewards, although that’s not always the case. Younger generations investing in cryptocurrencies have the time to take the risk because if their portfolio lags, they’ll have time to recover losses.
One thing you may not realize is cryptocurrency has virtually no backing. While many may believe the asset is here to stay, its longevity has no guarantees. That fact makes it a very high-risk investment, and when you’re talking about retirement, you want to ensure your money will be there when you hit retirement age.
Diversification is the key to any successful investment portfolio. It’s wise to arrange your retirement portfolio with assets that carry different levels of risk and across multiple sectors. If you choose cryptocurrency as one of your high-risk investments, you might want to consider more stable assets to balance your risk exposure. Plus, you probably want to select a coin that’s been around for a while, like Bitcoin, over a less stable digital currency.
Talk to your financial advisor about whether adding cryptocurrency to your retirement plan makes sense. As you grow closer to retirement, you’ll want to reassess your goals and risk factors to ensure your money is still growing and secure, so it will be there when you need it.
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