Are cryptocurrencies a good retirement investment?
No one knows with one hundred percent certainty. The technology (blockchain) that cryptocurrencies use is relatively young. On the other hand, more than 300 million people worldwide already own cryptocurrencies. Of course, that also says something.
It is more likely that more people will invest in crypto coins in the future. Take bitcoin. The number of available coins is limited to 21 million pieces. If more and more people want bitcoins, the price will increase. Questions about supply and demand.
The fact is that bitcoin does not represent an intrinsic value. Like fiat money by the way since the gold standard released worldwide in 1971. But central banks like to keep fiat money as stable as possible, and cryptocurrencies have no official central overseer.
Cryptocurrencies, such as Bitcoin and Ethereum, have become quite popular in recent years. Both as a personal investment and a business investment. Are you also interested in buying, selling and storing digital currencies? Create a free account with the largest trading platform in the Netherlands: Bitvavo and trade the first €1000 without transaction costs.
What opportunities does investing in cryptocurrency offer?
Cryptocurrencies have enormous growth potential. Just ask the people who bought bitcoins in early 2016. The price has since increased by around 5000 percent! This makes them attractive as an investment for, for example, a good pension.
But let’s be honest: compared to a year ago, the share price has already fallen by around 70 percent. In short: Cryptocurrencies are very volatile, and you need to be able to handle that. Your financial situation should also be fairly stable.
Some investors periodically add a fixed amount of crypto to their portfolio in the belief that bitcoin and other currencies will always reach new highs over time.
How can you invest in crypto without taking too much risk?
To start by investing only or mainly in the biggest and least volatile cryptocurrencies: bitcoin and ethereum. Of course investing and investment is never without risk. You may lose part of your investment. And with some crypto, it is very possible that you will lose your entire investment (and thus your pension).
Especially if you invest long-term in one of them thousands of altcoins are added every year. Undoubtedly, there are trendy cryptocurrencies that you can make a lot of money from.
But in general, the greater the risk, the greater the chance of a major stroke. It is more like gambling and speculation. It is not investing.
Those looking to invest in crypto for the long term would do well to limit themselves to, for example, bitcoin and ethereum. By dividing the total amount equally among these coins, you also spread that risk even more.
What percentage of your investment portfolio should you invest in crypto?
An average investment advisor will say that it is wise not to put more than 5 percent of your total invested capital into cryptocurrency. But there are experts who advise going up to 20 per cent.
This just depends on the amount of risk you are willing to take with your investments. With 5 percent in crypto, you can take advantage of the huge upside potential of digital money. But your investment portfolio won’t be hit too hard if the price of crypto drops by tens of thousands of percent in a short period of time.
Is now a good time to invest in crypto?
Anyway, it’s not the worst time to buy your first bitcoins. That was in November 2021. Then bitcoin reached its peak at around $68,000 highest rate until now.
If you had entered then, your bitcoin investment is now worth only a third. The price has hovered around $20,000 for months. Because no one knows if we’ve seen the new bottom with this, it’s smart to make incremental purchases. Does bitcoin price drop after your first purchase? Then you have the opportunity to make the next purchase at a lower price.
Is crypto safe enough to invest?
All cryptocurrency transactions are tracked by a network of countless computers. In that sense, crypto is secure because this decentralized system cannot actually be hacked. You are responsible for the security of your own crypto coins.
You can store them in a digital wallet that you manage from your computer or phone. With very large amounts, it is even safer to store them offline on a hardware wallet (a kind of USB stick). As long as you know your passwords, you can access your digital money online anytime, anywhere.
Another option is to store crypto with a reputable exchange. A professional party stores your digital money in a safe way and there are even crypto exchanges there account guarantee offer. This guarantees that users will be refunded up to €100,000 if someone has unauthorized access to a user account and your crypto is stolen.
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