{"id":3699,"date":"2021-05-23T15:28:22","date_gmt":"2021-05-23T14:28:22","guid":{"rendered":"https:\/\/coinscreed.com\/staging\/?p=3699"},"modified":"2021-05-23T15:28:26","modified_gmt":"2021-05-23T14:28:26","slug":"crypto-can-rev-up-your-retire-early-plan-it-can-also-kill-it-be-careful","status":"publish","type":"post","link":"https:\/\/coinscreed.com\/staging\/crypto-can-rev-up-your-retire-early-plan-it-can-also-kill-it-be-careful\/","title":{"rendered":"Crypto Can Rev Up Your Retire-Early Plan, It Can Also Kill it, Be Careful"},"content":{"rendered":"\n
Cryptocurrency like Bitcoin has been around for so many years and has also survived numerous crashes (see also:\u00a0this past week<\/a>,<\/a> which saw Bitcoin tumble as\u00a0crypto champion Elon Musk<\/a><\/a>\u00a0began questioning its negative impact in our society).<\/h5>\n\n\n\n
\"Crypto<\/figure>\n\n\n\n

<\/p>\n\n\n\n

The boom in cryptocurrency\r\n \r\n \r\n \r\n <\/g>\r\n \r\n \r\n \r\n <\/clipPath>\r\n <\/defs><\/svg><\/span><\/a> that has happened over the years shows a larger acceptance as individual investors and corporate bodies have bought in. In early 2020, Bitcoin was trading around $7,000 and is now around $40,000 (down from $60,000 in mid-April), buoyed by corporate interest and regulatory clarification that allowed national banks to provide cryptocurrency custody for customers.<\/p>\n\n\n\n

The potentially astronomical gains could be tempting for FIRE adherents who are looking to shorten their road to financial independence or retiring early. And in fact, financial advisor Jake Morris says FIRE-oriented clients are bringing up cryptocurrency more often in their conversations with him. \u201cFor younger investors, there\u2019s a natural affinity for crypto,\u201d says Morris, founder of Rhinebeck, N.Y.-based Fun Financial. \u201cIt\u2019s of their generation, and it presents a new chance to get ahead.\u201d<\/p>\n\n\n\n

But as the latest turn lower suggests, the extreme ups and downs of cryptocurrencies could undermine otherwise solid planning. While Morris encourages clients to consider any investment that can help people achieve financial independence, he doesn\u2019t recommend relying on cryptocurrency to get them there. In fact, he says, the hype around cryptocurrency could lead people away from some of the fundamental principles of a solid FIRE plan.<\/p>\n\n\n\n

Why Crypto Is a Risky Bet<\/strong><\/h2>\n\n\n\n

Compared with other investments, cryptocurrency is still in its infancy. Looking at the recent boom and forgetting the years that cryptocurrency prices remained flat\u2014or plummeted\u2014is a form of recency bias. Expecting a cryptocurrency investment to continue surging like it has is an iffy bet for investors looking to retire early, says Morris.<\/p>\n\n\n\n

\u201cThat\u2019s not a bet that I would make for myself,\u201d Morris says. Instead, he advocates that his FIRE clients stick to the tried-and-true methods of being disciplined about saving and spending and making aggressive, targeted investment in stocks and other proven assets.<\/p>\n\n\n\n

Some investors use cryptocurrency as a hedge against inflation, he says. But while digital currencies aren\u2019t tied to the dollar, there\u2019s also no guarantee that their long-term performance will exceed that of the stock market, which has a strong track record stretching back several decades. The S&P 500, for instance, has posted an average annual return of about 6.4% over the past 20 years.<\/p>\n\n\n\n

Of course, there are plenty of stories of investors striking it rich with Bitcoin and other digital currencies\u2014and it\u2019s possible to make a lot of money quickly if you time the market correctly. The problem is, timing the market is hard to do. For every story about a Bitcoin millionaire there are many other, less publicized stories about investors losing money in cryptocurrency markets.<\/p>\n\n\n\n

\u201cMost FIRE investors are trying to reduce the amount of anxiety they feel around money,\u201d says Morris. \u201cIf you\u2019re investing in crypto, it\u2019s hard not to worry about it every day. That\u2019s not the kind of lifestyle most FIRE investors want for themselves.\u201d<\/p>\n\n\n\n

The Long-Term Prospects of Crypto<\/strong><\/h2>\n\n\n\n

That said, cryptocurrency may become a less volatile investment opportunity in the future. In April, digital currency trading startup Coinbase<\/use><\/svg><\/span><\/a> went public on Nasdaq, the first such company to do so. Further mainstream acceptance could help usher in an era in which cryptocurrency is more widely accepted as a currency and less prone to wild swings in value, making it a more feasible source of income for people living off their savings.<\/p>\n\n\n\n

For now, though, Morris says including cryptocurrency as 1% to 5% of your portfolio could be an interesting experiment for FIRE investors who can handle the potential losses\u2014and who don\u2019t think they\u2019ll get stressed out by following the daily ups and downs of the cryptocurrency market.<\/p>\n\n\n\n

\u201cIt\u2019s up to everybody to say what feels right for them,\u201d he says. \u201cIf you can survive a sudden 50% drop in your crypto investment, financially and emotionally, it might be worthwhile to look into.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Cryptocurrency like Bitcoin has been around for so many years and has also survived numerous crashes (see also:\u00a0this past week, which saw Bitcoin tumble as\u00a0crypto champion Elon Musk\u00a0began questioning its negative impact in our society). The boom in cryptocurrency that has happened over the years shows a larger acceptance as individual investors and corporate bodies […]<\/p>\n","protected":false},"author":63,"featured_media":3703,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[238],"tags":[152,132],"class_list":["post-3699","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-bitcoin","tag-crypto"],"jetpack_featured_media_url":"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2021\/05\/a1639313a02e48a31aafb8588e6875d8.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/3699","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/users\/63"}],"replies":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/comments?post=3699"}],"version-history":[{"count":0,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/3699\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media\/3703"}],"wp:attachment":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media?parent=3699"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/categories?post=3699"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/tags?post=3699"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}