For newcomers, especially those in and around retirement age, the idea of investing in or owning bitcoin can evoke reactions from skepticism to disbelief. If you look beyond the popular narratives, however, you might find there is more to the story than first impressions suggest. Here are six reasons to consider owning at least some bitcoin during retirement.
Bitcoin helps broaden your asset allocation base
Traditionally, investors use a strategy called asset allocation to distribute and shield funds from investment risk over time. A sound asset allocation strategy is the antidote to putting all of your eggs in one basket. There are several types of asset "classes" or categories over which to distribute risk. Customarily, advisors seek to establish a dynamic mix between debt instruments (i.e., bonds), equities (i.e., stocks), real estate, cash, and commodities.
Bitcoin offers a hedge against inflation and currency debasement
As a retiree, protecting yourself from inflation is crucial to preserving your long-term purchasing power. In the asset allocation discussion above, we referenced the recent and aggressive money supply expansion. Everyone who has lived long enough to approach retirement age knows that a dollar no longer buys what it used to. When the government issues large amounts of new money, it debases the value of the dollars already in circulation. This generally pushes prices higher as newly created dollars begin to chase the existing limited supply of goods and services.
Bitcoin offers an opportunity for asymmetric returns
Bitcoin's capacity to mitigate many of the challenges we discuss here rests on its ability to achieve asymmetric returns. Its supply is fixed (there will only ever be 21,000,000 bitcoin), and demand for the asset is growing steadily. As this limited supply collides with increased store-of-value adoption from individuals, institutions, and governments, bitcoin has the potential to dwarf the returns of nearly every competing asset class.
Bitcoin offers protection from the risk of long-term bonds
Conventionally, high-grade bonds—held directly or as fund shares—make up a significant part of most retirement portfolios due to their low risk levels and tendency toward capital preservation. However, things have changed.
Bitcoin offers a potential solution for long-term healthcare risk
Another area of concern for retirees is the cost of healthcare. Here, I am not referring so much to ordinary medical bills but rather to the potential to incur long-term care expenses in later age. Insurance is available for long-term care, but it has some unique and increasingly difficult challenges to overcome.
Bitcoin offers you individual sovereignty
The final reason we'll consider for owning bitcoin in retirement is that it offers you increased individual sovereignty. Bitcoin provides you a level of ownership that is not achievable with other assets. It can easily be carried across borders with a hardware wallet or seed phrase, for example, or transferred peer-to-peer anywhere in the world at low cost.
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Three ways to invest in gold for retirement
It is crucial to understand how you can incorporate gold into your retirement plans. If you have a 401(k) account at work, there are several ways you can invest in gold. You might also consider investing in gold outside your workplace. One example is opening a custodial accounts at Fidelity Investments if an IRA (Individual Retirement Account), if you already own one. You may also want to purchase precious metals from a reputable dealer if you don’t already have them.
These are the three rules to follow if you decide to invest in gold.
- Buy Gold With Your Cash – Do not use credit cards to purchase gold. Instead, put cash into your accounts. This will help to keep your purchasing power high and protect you against inflation.
- Physical Gold Coins to Own – Physical gold coin ownership is better than having a paper certificate. The reason is that it's much easier to sell physical gold coins than certificates. There are no storage fees for physical gold coins.
- Diversify Your Portfolio. Never place all your eggs in the same basket. This is how you spread your wealth. You can invest in different assets. This can reduce market volatility and help you be more flexible.
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By: Unchained
Title: 6 Compelling Reasons to Consider Owning Bitcoin in Retirement
Sourced From: bitcoinmagazine.com/markets/6-reasons-to-own-bitcoin-in-retirement
Published Date: Fri, 03 May 2024 21:31:09 GMT
