As the prospect of retirement draws closer, thoughts inevitably turn to how one will fund their golden years and live the retirement of their dreams.
While superannuation and savings certainly play a part in funding your retirement plans, it can be worth considering investment options beyond these traditional avenues.
Diversifying your portfolio through alternative investments can potentially lead to higher returns and one such alternative option worth considering is cryptocurrency.
In an effort to better understand cryptocurrency as a possible investment option, Starts at 60 delves into the benefits and drawbacks, as well as important factors that you should consider when deciding whether cryptocurrency is for you.
Cryptocurrencies are digital or virtual currencies that use cryptography for security. They operate independently of a central bank and can be traded on online exchanges. One of the benefits of cryptocurrencies is that they are decentralised, meaning that they are not subject to government or bank regulations. This can be appealing to retirees who may be wary of traditional financial institutions.
Additionally, cryptocurrencies can offer high returns on investment, especially if purchased during a market boom. However, there are also significant risks associated with cryptocurrencies. They can be volatile, and their value can fluctuate dramatically, making them a risky investment for those who cannot tolerate risk.
One of the main advantages of cryptocurrency as an investment option is its potential for significant growth. Cryptocurrencies have experienced considerable gains in the past, with some increasing in value by thousands of percent in a short period.
Certified Financial Planner, Daniel Rickard from Illuminvest outlined some of the benefits that can come with investing in cryptocurrency. Some of which can include:
However, investing in cryptocurrencies also carries significant risks. The value of cryptocurrencies can be highly volatile and can fluctuate rapidly, making them a risky investment. Additionally, investors can lose their entire investment if the value of a particular cryptocurrency drops to zero.
With this in mind, Rickard also outlined some of the downsides that can come with cryptocurrency investment that retirees should be aware of. Some downsides can include:
When considering any investment option, it’s important to take a few factors into account. First and foremost, you need to consider your risk tolerance. Investments that offer high returns also tend to come with higher risks, and it’s crucial to determine how much risk you are willing to take on.
Additionally, you need to consider your income needs. For example, investments that generate income can be a good way to supplement retirement funds. Finally, consider your overall financial goals. Are you looking to generate income, grow your wealth, or preserve your assets? Different investment options will be more suitable for different goals.
When it comes to cryptocurrency, the factors that need to be considered are no different. Given that investing in cryptocurrency can be a potentially lucrative but risky endeavor it requires careful consideration and research.
Rickard suggests retirees consider the following when deciding if cryptocurrency is right for them as a sound investment option.
While cryptocurrency can be a viable investment option for retirees seeking to diversify their portfolios and potentially earn high returns, it’s important to be aware of the risks associated with investing in this particular option. Before investing in cryptocurrency, retirees should carefully consider factors such as their risk tolerance, investment goals, and income requirements. By conducting thorough research and seeking out advice from financial professionals, retirees can make informed decisions about whether cryptocurrency is a suitable investment option for them.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.