In 2013, when the world had lot of questions looming around Bitcoin, people were willing to explore it as an investment opportunity. The central interest was around finding ways to capitalize Bitcoin’s properties to make it a prudent investment. Ranging from portfolio diversifier to pure investments, Bitcoin has come a long way slowly replacing the traditional investment formats. One among such most sorted investment formats is our average retirement account. Let’s look into how and why Bitcoin can be a good investment alternative for retirement account:
The suitable traits:
Investments for a retirement account should be diverse, offering great mix and should be able to counterbalance losses of each asset in the portfolio. This would mean the assets have to be non-correlated to the maximum extent. This would also improvise the risk to reward ratio and offers great deal of flexibility. Bitcoin perfectly fits the requisite description as it has no direct bearing with macroeconomic factors. By the virtue of its digital properties, the rules that govern the market don’t necessarily apply to Bitcoin. This makes it one of the most non correlated currency with respect to any asset class.
A typical investment would include few asset classes with good returns and would have small portions of assets for hedging. Traditionally the portfolio would have about 10 % invested in Gold, real estate or hedge funds to manage the risk of the profile.
Current status of Bitcoin investments:
Post 2013, Bitcoin has had its own set of pitfalls but the currency has recovered significantly well over the course of time. From 2014 the yearly returns on Bitcoin have remained positive and the price swings were sufficiently large to ensure good returns. Swing investments aggregated over the time would have resulted in returns better than any asset class.
Future of Bitcoin and associated investments:
The future of Bitcoin depends on the adoption of the currency at a consumer level. With great Venture Capital backing, the Bitcoin industry is expanding and consolidating with strong roots. The prime focus of the industry has been to provide applications of Bitcoin in a more packaged and consumer friendly manner. With sufficient push and better adoption the currency is sure to see mainstream adoption.
Apart from Bitcoin, the adoption of its underlying technology is also very vital to the cause. It has also impacted the prices significantly in the past. So basing on these factors it is evident that adoption is the key to have sustained returns on Bitcoin. Basing on the returns, Bitcoin surely would be an important part of your portfolio.
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