In recent years, cryptocurrencies have become the talk of the town. Despite their volatility, these financial tools have gained tremendous popularity as the most significant invention in finance and wealth management. Given the amount of attention this area is receiving and the amount of money being invested in it, younger generations planning retirement today may be enticed to include crypto assets in their portfolio.
However, Bill Schantz emphasizes that there are several unanswered questions. Is it possible to invest in cryptocurrencies in the long run? Should a person consider this asset class to ensure a secure retirement? Most importantly, should a person consider investing in cryptocurrency long-term?
Bill Schantz Explains the Basics of Digital Assets
Cryptocurrencies, often known as digital currencies or assets, are built on the Blockchain, a decentralized ledger system. While financial experts disagree on the future of cryptocurrency, they all agree that the underlying technology, known as Blockchain, is here to stay. However, as Bill Schantz points out, many mainstream investing organizations and financial institutions are becoming friendlier to cryptocurrency.
Morgan Stanley has announced the establishment of three funds that would allow investors to include Bitcoin in their portfolios. Fidelity also announced the launch of a Bitcoin exchange-traded fund at the same time. Other businesses have followed suit, allowing the stock market to gain confidence. This, however, has had little impact on the current level of extreme volatility.
Keep Crypto Investments Limited Bill Schantz Stresses
Despite their popularity and interest, Cryptocurrencies should not be compared to other asset classes, particularly when it comes to retirement planning. Even though they are genuine investments, long-term investors should be cautious. Digital assets are one-of-a-kind investments that can plummet to zero or expand by more than 100% without any discernible signs. According to Bill Schantz, it’s a high-risk and high-profit game.
Given this phenomenon, it is not prudent for a parent to put their child’s education money or future healthcare expenses at risk by investing in cryptocurrencies. There is no harm in investing 1% to 5% of one’s overall assets in these digital currencies. This proportion can be raised to 10% for individuals who understand the market and know how to step carefully, but that is the upper limit, especially if sustainable investments are the goal.
Bitcoin and Ethereum are two of the most popular coins for investors to put their money. However, until a significant amount of Bitcoin is purchased, the profits are not impressive, given the market capitalization of these two coins.
As Bill Schantz explains, cryptocurrencies are a lucrative market where new investors can make quick money. They are, however, not an asset type that should be considered when constructing a long-term portfolio. Most importantly, when it comes to retirement plans, it is recommended to stay away from this market or simply invest a modest amount that will not harm if lost entirely.