Cryptocurrency has officially entered the mainstream financial world now that it’s even possible to build your pension in crypto.
Financial service companies Aviva and Cantor Fitzgerald teamed up earlier this year to offer their pension customers a cryptocurrency investment option. And those with a self-invested personal pension (SIPP) can also choose to invest their money in crypto, should they wish to, depending on the bank that they use. Hargreaves Lansdown customers, for instance, are able to invest in Ethereum and hold it in their SIPP.
One of the interesting points about investing in cryptocurrency through a pension is the fact that it does away with some of the more complicated elements of the crypto purchasing process. For instance, you won’t need to set up a digital wallet in order to store and trade your assets.
Pension experts are already predicting that this will become a more popular option for investors over the coming years, as cryptocurrency grows in credibility.
An opportunity for huge rewards
The draw of a crypto pension is that when investors win, they tend to win big. If you get in with the right currency at the right time, you have the potential of making a huge profit – the type of return that isn’t possible when you stick to more conservative investments.
Unfortunately, this is far from a guaranteed outcome. Time it wrong, and you stand to lose money. While that might be fine for a casual investment, the stakes are a lot higher when you choose to invest your pension. This is money that will guarantee your future quality of life, so it should only be staked on crypto if you’re comfortable with the risks.
The lack of regulation offers pros and cons
Because cryptocurrency is less regulated than other financial products, it can be more difficult to recover your money should something go wrong. Again, this is something that you need to consider seriously when you are looking at a pot of money as important as your pension fund.
On the other hand, that lack of regulation also means that there is less interference and therefore more potential for growth.
A reliable income for the future?
XPS Investment’s report ‘does Bitcoin have a place in a pension scheme portfolio?‘ suggested that “there is scope for Bitcoin’s success to continue if it becomes more widely adopted”. However, they also warned that it is not a reliable store of value – making it more suitable as a short-term tactical manoeuvre rather than a long-term pension investment.
One way of taking advantage of cryptocurrency’s potential over the short-term, without risking your pension, is through trading. Using an app such as crypto method means that you can make daily trades, hopefully earning a profit each time. It is a free app that offers daily cryptocurrency market analysis, information about when to buy and sell your currencies, and even an option for automatic trading. With a minimum deposit of just $250, this can be a fun alternative to more traditional types of investment such as a pension pot.