Should this rising asset have a place in your long-term investments?
Does cryptocurrency belong in a retirement investment account? Should investors trade it in the short-term or buy and hold? How much money is too much to allocate to bitcoin or ethereum?
Whether or not there should be cryptocurrencies in a retirement portfolio depends heavily on the individual’s goals, time horizons, risk tolerance and assets, but it is one way to diversify investments. As an alternative, cryptocurrencies may be best as a small percentage of a portfolio. Below 1% is “too small to matter much” and above 5% substantially increases risk, so “1 to 5% is a sweet spot,” said Matt Hougan, chief investment officer of Bitwise Asset Management.
What are the compelling reasons to invest in it for retirement? And what are the compelling reasons not to? But there are reasons not to include it in a retirement portfolio as well, aside from personal circumstances. “The biggest risk in cryptocurrency investing is behavioral risk,” Hougan said. The investment may be doing extremely well and hit a peak one month, but drop 50% and send investors into a panic to sell. “You have to have a long time horizon to hold an asset through periods of volatility.”
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