What role should Bitcoin play in retirees’ and near-retirees’ portfolios?
There is no doubt that its allure is overwhelming. The cryptocurrency has gained more than 60% just since the beginning of this year, and is up more than 400% over the last 12 months. Returns like that would go a long way toward restoring underfunded retirement portfolios.
In fact, many retirees and near-retirees have already invested in Bitcoin. A recent poll conducted by deVere Group of clients over the age of 55 found that “70% of those surveyed are already invested in digital currencies or are planning to do so this year.”
They need to tread carefully, however—very carefully. Bitcoin’s price is so volatile that it is inappropriate for any portion of their retirement portfolios except that with which they are able to speculate with abandon—their play money in other words.
Consider the standard deviation of Bitcoin’s monthly returns since the beginning of 2016: It is an incredible 25.3%. Those of you who remember…