Does Cryptocurrency have a place in your retirement portfolio?
I think that’s the case with a large portion of Americans. A recent survey by Nerdwallet shows that around 10% of US adults with retirement accounts say they have at least some codes. Young investors are even more enthusiastic, with 18% and 14% of millennials reporting crypto retirement retention.
Depending on the digital coins you own, Crypto Investors has been doing well recently. Bitcoin, the world’s largest and most valuable cryptocurrency, is currently trading for around $115,600. This is a 99% increase over the past 12 months.
Adding a retirement portfolio is easier than ever. Some brokerage companies, such as Fidelity, are beginning to provide direct cryptocurrency investments in IRA accounts and other brokerage companies, such as Charles Schwab, to provide access to Crypto ETFs. Last month, President Donald Trump signed an executive order laying the foundation for adding alternative assets, including crypto, to workplace retirement accounts.
Financial experts split over whether crypto-holding is a wise or appropriate addition to retirement savings, but most of them acknowledge certain levels of risk.
“The purpose of the average person is to have a safe and secure retirement plan,” Jerry Schlichter, founding partner of Schlichter Bogard, known for filing lawsuits on behalf of employees for excessive fees in a 401(k) plan, recently told CNBC Make It. “When we talk about new areas such as cryptocurrency and private equity, these are risky for investors for a variety of reasons.”
Weigh crypto risks and potential returns
The financial supervisors around Crypto come from two sources: One is asset class volatility. According to Islands, in the year ended January 2025, Bitcoin was considered more stable than other thinner-traded digital coins known as Altcoins, but was about five times more volatile than the broader US stock market.
Additionally, between 2015 and 2024, Bitcoin posted two nightmare calendar year performances. 74% drawdown in 2018 and 64% slide in 2022.
Still, Bitcoin will handily beat things like stocks, bonds, gold, goods and more over the other eight years.
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Past performance does not guarantee future results. This applies to any investment, but summarizing the portfolio, Crypto’s long-term performance is another thing that tends to pause in financial advisors.
“These traditional retirement guardrails are based on years of history,” said Melissa Caro, certified financial planner and founder of my retirement network. “We really don’t have enough history as to how cryptography actually works.”
How to invest in crypto responsibly
If, like Schlichter, you consider your retirement account as a vehicle designed primarily to protect your assets, Crypto may not belong to an IRA or 401(k).
However, many funding professionals, including those who have an obligation to act on the best financial interests of their clients, are warming up the idea, provided certain precautions are being taken.
“The fiduciary (responsibility) still applies, but there are a lot of very smart investors who say that Bitcoin is investing rewards in the best risk right now,” says Joshua Brooks, CFP and founder of Exponential Advisor.
If you’re interested in adding crypto to your retirement portfolio, here are some ways to invest responsibly:
Please know yourself
“Crypto is a great opportunity for people, depending on your risk tolerance,” said Thomas Racca, manager of the personal finance management team at the Navy Federal Credit Union.
Generally, if you can handle your investment, the lower it will result in higher risk tolerance. This may mean that you are more likely to maintain or add less valuable investments, rather than panic and selling.
That may also mean you are younger and have time to regain your investment. This is also known as risk “capacity.” If it’s been a year since you tapped income on your portfolio, you won’t be able to afford a 20% DIP in your retirement account. For those planning to retire in decades, this isn’t too much of a concern.
Given Crypto’s track record of volatility, it’s only suitable for investors with a healthy appetite for risk and those who know who’s starting out and what, says Racca.
Do your research
Before investing or recommending Crypto, retirement savings and financial advisors should do their homework with digital assets, Brooks says.
“Like any investment, you need to have a conviction based on your research,” he says. Maybe you want to keep Bitcoin because you like that possibility as an alternative currency. Maybe you like the ether because of its role in the smart contract.
Whatever the reason for holding Crypto in your retirement account, it is essential that you have a long-term paper that you can reevaluate regularly. Otherwise, Brooks says you just want things to continue to rise.
Don’t expand too much
Even if you are confident of the long-term potential of a particular cryptocurrency, the lack of history in asset classes means that even the most convicted investors are wise to step on carefully, says Karo.
“We don’t have enough information,” she says. “You may turn around and realize you’re too cautious, but that’s all about your retirement plan.”
Financial planners generally recommend assigning a moderate proportion of the portfolio to dangerous assets such as cryptocurrencies, considering that a marked drawdown of that portion of the portfolio will not derail long-term plans.
Depending on risk tolerance, time horizon and other sources of income, Brooks recommends a maximum allocation of 5% to 15%.
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