Everywhere you turn, and even across political parties, the sentiment about retirement in America seems to share a rather uniform view: it’s bleak. According to a study published in 2017 by the National Institute of Retirement Security, 88% of Americans say that the nation faces a retirement crisis. When you get more specific, the statistics get even scarier: 21% of all Americans have $0 saved for retirement, and, if you’re looking at the millennial sector of Americans aged 21-32, that number climbs up to 66%. Above all else, there seems to be a general sense of confusion: 81% of Americans have no idea how much money they’ll need for retirement.
So, is the notion of retiring beachside with a margarita a thing of the past? Not necessarily. But now is certainly time to rethink strategy. And one of the crucial and often overlooked factors in a successful retirement portfolio? Diversification. “For a variety of reasons, people do not understand the value of having a highly diversified portfolio,” writes Barry Ritholtz in Bloomberg’s recent article “How to Avoid a Retirement Disaster.”
Some workers fear that investing in other stocks and assets will reveal a lack of corporate loyalty, while others, driven by wishful thinking, invest solely in their company’s stocks in the hopes that it will become the next Amazon, Apple, or Google. But, as Ritholtz explains, “That is a very intense concentration of financial risk. For those workers, diversifying their company stock into broad indexes is a prudent approach.”
Furthermore, it is also important to diversify across asset classes. Different assets, such as stocks and bonds, will not react in the same way to negative events, and a combination of assets is the best safeguard against a portfolio’s sensitivity to market swings.
As the COO of BitcoinIRA.com, the world’s first and largest cryptocurrency retirement platform, I talk to customers every day about how Bitcoin and cryptocurrencies, removed from third-party interference and stock market fluctuations, can function as a valuable asset class in a successfully diversified retirement portfolio. Here are a few reasons why.
A Rising Star in Wall Street Circles
According to CoinDesk’s comprehensive State of the Blockchain report for Q1 2018, 69% of people surveyed think that Bitcoin’s prices at the end of Q1 2017 are undervalued, indicating that the Bitcoin’s star is rising. This sentiment is largely reflected by the surge of mainstream acceptance that cryptocurrencies are seeing, particularly in the Wall Street domain.
The CME and Cboe were the first two institutions to launch regulated Bitcoin futures in 2017, serving as trailblazers for larger adoption in the mainstream finance world.
Since then, Goldman Sachs announced the first Bitcoin trading operation at a Wall Street bank, while Nasdaq has announced a collaboration with cryptocurrency exchange Gemini, and confirmed their interest in eventually becoming a crypto exchange as well.
In addition, Goldman Sachs alumnus, and billionaire cryptocurrency advocate Mike Novogratz just announced a partnership with Bloomberg to launch the Bloomberg Galaxy Crypto Index, which will track the performance of the ten most liquid cryptocurrencies. “This is just one more building block in the foundation that will get, at one point, pension funds and family offices and sovereign wealth funds all participating in the crypto economy.”
I believe that this shift towards mainstream acceptance indicates Bitcoin’s staying power as a viable long-term asset class for a diversified retirement portfolio.
A Complement to Gold
Gold has been around for thousands of years, and its finite supply, as well its removal from the stock market, has helped earn its reputation as a notoriously reliable investment as well as a valuable hedge against inflation.
While Bitcoin has only been on the scene since 2009, it has already demonstrated similar merits. According to research published by ArkInvest and Coinbase, Bitcoin has already been recognized as “the only asset that maintains consistently low correlation with every other asset,” demonstrating its strength as a diversified asset in a retirement portfolio.
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A Groundbreaking Technology
Industries across a variety of sectors are recognizing that the decentralized blockchain technology that powers Bitcoin has major applications in a variety of enterprises. The decentralized blockchain technology that powers Bitcoin is already the way that many industries run the business. Facebook recently announced the launch of a blockchain research team, with interest in the technology’s application to such fields as data storage.
Amazon, too, just announced a partnership with a new start-up called Kaleido that makes it easier for customers to put their services on a blockchain. “Introducing Klaido to Amazon Web Services (AWS) customers is going to help customers move faster and not worry about managing blockchain themselves,” Amazon Web Services said in a statement, adding that it is the first Blockchain SaaS solution available on the AWS marketplace.
In my opinion, Bitcoin’s influence in the mainstream finance and technology sector is more powerful than ever. A distinguished asset alongside gold, I believe that Bitcoin will continue to prove itself as a valuable digital asset in a diversified retirement portfolio.
This article was written By Chris Kline, Co-founder, and COO at Bitcoin IRA