You may have heard of the “60/40” rule for retirement accounts. In the past, conservative brokers have traditionally recommended putting 60% of your assets in stocks and 40% in bonds.
Just take a look at how that advice is playing out in today’s economic climate. If you are continuing to follow the 60/40 rule, think again.
Bond yields have seen an alarming plunge and stocks are still near all-time highs, even with dips caused by the coronavirus panic. Volatility levels have been rising and are showing no signs of slowing down as the world braces for an inevitable recession. Not exactly the time to have all your money in stocks and bonds, right?
Time for a little secret. Let’s take a hypothetical trip back in time. It’s 2013. There’s an asset out there that you could add to your portfolio. It’s called cryptocurrency. You want to play it extra safe and only make it 1% of your total investments.
Guess what? By 2020, your portfolio with a 1% crypto stake has outperformed the traditional 60/40 portfolio by 20 percent. The most exciting part? This is just the beginning.
Last year, CNBC reported that the United States government’s Social Security program is set to be insolvent by 2035. If you’re in your 50’s or younger, don’t count on much help, if any, from Uncle Sam in your golden years. Likewise, the era of company-sponsored pensions is long gone and 401(k) matches are getting worse or disappearing completely.
In fact, “According to some reports, many people under 40 believe they will never retire,” says Morgan Steckler, cryptocurrency retirement fund expert of iTrust Capital. But for those that are smart enough to get into crypto now, “it could still lead to life-changing returns and give those people that option to retire if they so choose,” Steckler added.
A 2018 study by Ramsay Solutions exposed what could be considered a crisis in this country, revealing that roughly half of Americans are not saving for retirement. Another study by Bankrate predicts that half of all working households will experience a decrease in their standard of living during their retirement. Is that really what you’ve been working towards and planning for your whole life?
All of these facts aren’t going unnoticed. We’ve recently seen Fairfax County in Virginia take the groundbreaking step of investing millions of its pension funds into cryptocurrencies. Even the IRS is on board, having approved crypto IRAs for the general public.
It’s never too late to start planning for your retirement, and it’s still not too early to start investing in cryptocurrency. If you haven’t seriously considered adding crypto to your portfolio yet, now is the time. Don’t just take our word for it, though. Let’s take a look at the top reasons why crypto should be a part of your retirement plans.
1. Diversification
We’ve all heard the saying, it’s as old as the concept of investing itself: “Never put all your eggs in one basket.” Diversification helps you minimize the risk associated with a single asset, yet still allows you to enjoy the growth of each.
The same applies to your retirement account. The old-fashioned strategy of only putting stocks and bonds in your tax-deferred retirement accounts is becoming obsolete. The IRS is fully on board with precious metals, real estate, and cryptocurrencies as part of retirement IRAs.
Any financial advisor worth their salt will recommend diversifying 5-10% into precious metals, and many are now suggesting the same with cryptocurrency. And why wouldn’t they? As an exciting new asset class that has seen consistent and explosive growth for a decade, it’d be irresponsible not to.
2. Protection from the Government
Pick a cryptocurrency. Bitcoin, Ethereum, Ripple, etc. It doesn’t matter which you choose, no government can control any of them. It’s literally impossible for Uncle Sam to seize your Bitcoins from your wallet against your will. They’d need your private key to access your funds. If you didn’t give it to them, then it would take the most powerful computer on earth BILLIONS of years just to crack it.
The government can’t print more digital currency either as they can with paper bills. Bitcoin, for example, has a set amount of coins, period. All that will ever exist were created with the currency itself. Outside forces are unable to manipulate it, unlike the Dollar, Euro, Yuan, etc.
With crypto, you’re protected from other nefarious third parties, as well. Cryptocurrencies don’t use middlemen, so transactions are direct between two parties. This means that it’s easier, faster, and safer overall.
3. Long-Term Growth Potential
Despite the fact that we have already seen an enormous amount of growth in the crypto space, we are still in its relative infancy. The other major asset classes out there such as precious metals, real estate, stocks, and bonds have all had a head start of hundreds or even thousands of years.
Bitcoin has now been around for roughly 10 years, which puts it in a uniquely advantageous position. We’re currently in the sweet spot where it has a long enough track record to consider it an established and stable commodity, but it’s still in its relative infancy compared to other investment options.
The subsequent upside? There’s still tremendous growth potential. Many have been predicting six- and seven-figure values for a single Bitcoin in a few years. Sound crazy? It’s most of the same people that predicted the rise from a few hundred dollars up to the $10,000 level that we’re hovering around today (and PS, most of them are now filthy rich).
4. Crypto is Resilient
Back in 2013, the LA Times famously published an article where they smugly declared the death of Bitcoin. How’d that work out for them? The article has aged quite poorly, to say the least.
Bitcoin has taken beatings both in the media and in the markets. Detractors and naysayers have been around since the beginning, and they have continually been proven wrong. Nowadays, if you’re blindly slamming crypto, then prepare to be considered out of touch.
One argument you’ll hear against Bitcoin is the volatility of the market. Earlier this decade, Bitcoin actually lost 70% of its value practically overnight. The naysayers won’t tell you how it quickly bounced back and shot up past its previous highs, though. It’s the same thing that happens every time. Compare that to the stock, bond, or real estate markets, which can take years just to creep back up to previous levels.
5. It’s Already Mainstream
As we just saw, there’s still a large crowd of crypto-doubters out there. Another one of their arguments is that Bitcoin and other altcoins are still lacking in mainstream adoption. When you look at the evidence and trends however, you’ll see that this point just isn’t true anymore in 2020.
Want to order something from Overstock.com? Grab a bite from a restaurant? Purchase sports tickets? A computer? Or a trans-Atlantic flight? Well, you’re in luck. Some of the biggest companies and organizations in the world accept Bitcoin as payment, including Microsoft, Dell, Tesla, the NBA, and Virgin Galactic. People are even buying houses with crypto these days.
It’s not even a question anymore. Bitcoin has already taken a foothold in the mainstream. Add to this the fact that on a global scale, more people have access to the internet than they have to banks or other currency systems. This is especially the case in developing areas such as Africa, where hundreds of millions of people will gain internet access for the first time in the coming decades. Given that the supply of Bitcoin is fixed, we’re going to see a massive increase in demand as third world nations develop.
Marcus Swanepoel, Chief Executive of Luno, explains how “Cryptocurrency is uniquely positioned at the apex of technology and finance. It has been lauded as a potential game-changer for society.” Expect prices to rise accordingly.
It’s Not Too Late
The price of Bitcoin has seen incredible growth, but it’s not too late to get in at what is still a relatively low level. By investing in cryptocurrencies, you’re not only protecting your portfolio from the volatility of the markets, but you’re setting it up for significant future growth, as well. Plus, you can save big on taxes by using cryptocurrency to contribute to your retirement IRA. It’s the best of both worlds.
At Regal Assets, we believe in providing you with trusted and proven cryptocurrency investment options. We take pride in the way we do business and have enjoyed helping our clients grow their portfolios for over a decade now. Our expert team members work side-by-side with you every step of the way, so you can be sure that your wealth is safe and in a position to grow.
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