Can You Retire Exclusively With Crypto?

Preparing for retirement isn’t easy, but the right investments can help boost your savings. Crypto was one of the most popular investments in 2021. Most cryptocurrencies have seen prices plummet this year, so now may be a more affordable time to buy. If prices eventually rise, you could potentially make a lot of money by investing now.

But how safe is crypto as a retirement investment? While some investors have made millions essentially overnight, is it possible to retire solely on crypto? Here’s what you need to know.

Crypto’s biggest risk

The most important risk to consider when buying cryptocurrency is that it is still a speculative investment. No one knows for sure whether it will still exist in a few decades, and even the most promising cryptocurrencies are not guaranteed to succeed.

That makes it a riskier investment, in general, and a particularly high-risk option for retirement. If all your savings are tied up in crypto and it eventually fails, you could lose it all.

Depending on how much time you have left before retirement, it can be tough or even impossible to get your savings back if you lose a lot of money. Putting all your savings behind a single investment is incredibly risky, but it’s especially dangerous with a speculative investment like crypto.

How to safely invest in cryptocurrency

While it may not be possible to retire exclusively with crypto, there are safe ways to add this type of investment to your retirement portfolio.

1. Double check your diversification: A properly diversified portfolio should contain at least 25 different stocks from a variety of industries. This will limit your risk because if one or two of your stocks falter, it won’t destroy your entire portfolio. When buying crypto, a well-diversified portfolio can help cushion the blow if your investment doesn’t pan out.
2. Only invest money you are comfortable losing: Crypto is still speculative right now, so there is always a chance that you can lose money you invest. Even if that doesn’t necessarily mean you want losing money with this investment, it is often wise to be cautious about your retirement savings.
3. Do your research before you buy: The crypto world is still the wild west in some ways. There is very little regulation in the industry, and fraud is common. Some cryptocurrencies may seem like a tempting way to make a lot of money overnight, but if it seems too good to be true, it probably is.

Crypto can be part of a well-balanced portfolio, but it is important to invest wisely. Instead of trying to make as much money as possible in the shortest amount of time, focus on finding strong cryptocurrencies with real-world uses and potential for long-term growth.

Where to start

If you are completely new to crypto, it may be worth starting with safer options such as Bitcoin (BTC 1.54%) or Ethereum (ETH 3.03%). These cryptocurrencies are the biggest and most popular in the industry. While there are no guarantees that they will succeed, they are two of the most likely to stick around in the long run.

If you are an experienced investor or looking for under-the-radar cryptocurrencies, you may need to do more research to determine which investments are right for you.

Smaller cryptocurrencies often have more room for growth (so you can potentially earn more), but they also tend to carry more risk and are more speculative than their larger counterparts. As you approach retirement, it’s important to consider how much risk you can afford to take with your investments.

No matter where you invest, it’s wise to be realistic about how crypto can affect your savings. While it can be a potentially lucrative investment, it is also more risky than stocks. Whether that risk is worth the potential rewards will be up to you to decide.