Retirement takes place at some point in a human’s professional life. Thus, planning for retirement is a tedious process but is considered one of the prominent financial objectives in one’s life.
The process to invest for retirement should begin early since investment is long-term and risky in nature. Furthermore, the risk can also be integrated into your crypto portfolio. There have been certain disagreements regarding the use of one’s retirement funds to invest in cryptocurrency exchanges like bitcoin exchange through the top crypto trading website. This write-up will cover the pros and cons of doing such investments.
What is the nature of cryptocurrencies like Bitcoin?
Understanding the nature of cryptocurrencies such as Bitcoin is necessary before making a decision to buy crypto with retirement money. Bitcoin is one of the first crypto assets whose value is not pegged to a valuable metal or a company’s profits. Its value fully relies on the demand and supply of the crypto market.
Cryptocurrencies such as Bitcoin are not controlled by any central institutions like banks and are accepted as a mode of payment to purchase goods and services by some companies. Moreover, its value is always fluctuating due to market factors, thus, making it one of the most volatile assets to maintain in your portfolio.
Launched in 2019, Bitcoin has gained ample fame and value from millions of new and old investors in the world of cryptocurrency exchange due to its unique features such as quick transactions, nominal transaction charges and other characteristics.
As the financial environment is governed by uncertainties and sentiments, it is hard to analyse the price fluctuations of crypto assets like Bitcoin. But, there are also many benefits of buying Bitcoin and other cryptos with your retirement funds.
Let’s explore the incentives offered by Bitcoin in detail:
- Improved control
Compared to other investment choices such as capital markets or bank deposits, you have full access or control over your funds in the world of crypto. There is no need for any intermediaries for handling your transactions as the blockchain networks where cryptocurrencies are listed follow the DeFi (Decentralised Finance) protocol.
- Diversification
Since bitcoins can operate with low correlations along with traditional asset classes like debt and equity, they can serve as an alternative investment option. Moreover, due to any market downfalls, the money contributed towards buying Bitcoin will not be influenced.
- High potential to give good returns
Observing the trend of Bitcoin value over the years, it has the potential to provide great returns for long-term investment. Henceforth, investing in Bitcoin or cryptos of similar nature can prove to be fruitful for a long-term period of 4 years or more.
Besides its benefits, there are also some disadvantages associated with an investment in Bitcoin or other cryptocurrencies.
- Volatile nature
Crypto assets like Bitcoin have shown volatility in the past and will continue to show it in the near future. Therefore, it’s integral to observe the nature of the cryptos during the time of withdrawal as any time their value can fall or rise.
- Security
There have been certain cases in cryptocurrency exchange where the electronic wallets of the users have been misused. Also, a few hacking or scamming cases have occurred. Therefore, it is ideal to use the best cryptocurrency wallets in India like WazirX which provide optimum security to your funds, crypto assets and private information.
- Growth problems
The growth potential of crypto relies on its ability to attract investors and the innovation it does on the blockchain. Although Bitcoin has shown incredible growth, predicting whether this trend will continue in the future, is hard to determine.
To conclude, investing your retirement money in crypto assets like Bitcoin is risky in traditional monetary aspects, but contributing a small amount of the funds to Bitcoin or cryptocurrencies of similar nature can turn out to be beneficial due to its unique features. Apart from this, it will also diversify your crypto portfolio and add to your growth possibilities.
