Is It Worth It To Diversify Your Retirement Between Traditional Funds and Crypto?
The Importance of Diversifying Your Portfolio
We are living in a world with so much uncertainty. Globally we have been hit by a pandemic and a war, with no clear sign of “normalcy” in sight. As a result, the economy and stock market have taken major blows. These are things that force us to reimagine and reconsider everything about our future.
With all this chatter about Crypto in the news, some may be wondering if now is a good time to add this investment to their portfolios. It’s not a bad question. Lets explore. Is it worth it to diversify your retirement between Traditional Funds and Crypto?
We are going to take our time with this topic, as we know its a lot to take in all things considered. My hope is that after reading this, you will be compelled to have confident conversations surrounding your future. Some are knee deep in investments, others have yet to get their feet wet. This conversation is for everyone.
What does it mean to diversify your retirement fund? Im glad you asked. It simply means to spread your money into different investments. This strategy helps to reduce risk and maximize your return. No matter the goal, diversification is key.
Alternative Funds Vs Traditional Funds
When it comes to investment, risks can only be managed not avoided. Every investment comes with a risk. If you haven’t started investing into your retirement fund, now’s a great time to start.
Lets start with traditional funds, also known as traditional investments. These are assets that appreciate in value over time. Some examples of traditional funds are cash, bonds real estate and equity share.
Next, we have alternative investments. These are assets that move in a different direction than the market. Examples would be mutual funds, hedge funds and EFT’s.
These investments are great ways to hedge against market dips. If you want to diversify your retirement fund, it would be wise to consider adding alternative investments to your portfolio.
Cryptocurrency or crypto is digital currency that uses cryptography to secure transactions. It is monitored by peer to peer transactions via blockchain technology.
Which means no banks, just a secured network of individual people. In terms of investment.
Cryptocurrency would be considered a High risk alternative investment. With high risk, comes high reward. The question is how much can you afford to lose?
Some people tend to lean towards investing with crypto because of the security and safety offered by blockchain. It’s also extremely convenient. There are many people who have found success in crypto investment. Which confirms that there is opportunity to make lots of money. On the flip side, cryptocurrency is still in its infancy stages which creates an extremely volatile environment for investments. There’s no stability because crypto isn’t backed by anything, unlike traditional banks.
Keep Your Eye On The Prize
In terms of your retirement fund, you might want to hold off on investing in crypto. There are a multitude of alternative investment that can bring lots of value to your portfolio. Most people are looking to create stability for their future when looking for investments for their retirement fund. As of today, The risk outweigh the opportunity. But keep your eye on the prize, diversification is key.
The stock market is worth 68 trillion dollars while the crypto market is worth close to 200 billion. It’s important that you keep yourself informed on the latest investment opportunities as things are changing rapidly.
Exploring crypto investments outside of your retirement fund may be a safer way to test the waters. If you’re a risk taker, talk to your financial advisor about developing a strategy. Be proactive. Hopefully you feel a lot more confident about having conversations about the future of your finances in spite of what is happening in the wold around us.
