Could you retire by investing only in Bitcoin?

pensions Could you retire by investing only in Bitcoin?Bitcoin is the best known of the cryptocurrencies and has seen a rapid rise in price since virtual currency was introduced. Many leading financial experts have endorsed investing in Bitcoin, including Dave Ramsey and Suze Orman.

But even if invest a little bit of money in Bitcoin could be a good investment approach, you should definitely not make it the centerpiece of your retirement savings efforts. Here because.

Don't get carried away by "easy money"

Bitcoin has seen explosive gains since virtual currency was created, and there is definitely an argument to be made that you could make a lot of money by investing in it.

But the problem is that its real-world usefulness is still limited currently, and it has a relatively short track record compared to many other assets you may be investing in. It is impossible to know what the future holds for Bitcoin. And with coins only having value because people believe they have it, there is a very real possibility that an investment in Bitcoin could end up being a long-term loser.

While Bitcoin may be riskier than many other investments, such as index funds or stocks in established companies, that's not the only reason you shouldn't count on it to make you a retired millionaire. You shouldn't base your entire retirement portfolio on a single investment, be it Bitcoin or Apple stock or even an S&P 500 index fund.

This is because putting all your eggs in one basket is just too risky when it comes to retiring. Retirees cannot live on Social Security alone as it is meant to replace only 40% of your pre-retirement earnings. You need to have a sizable nest egg to cover your needs without too much financial hardship, so you need a retirement portfolio that doesn't expose you to too much risk.

You need to diversify, even with Bitcoin

The best way to build such a portfolio is to invest in a broad mix of assets, including stocks, bonds, index funds, and cryptocurrencies, if you are interested in buying them. By mixing some higher risk assets with the potential for higher returns (like Bitcoin) and others with lower risk that limit the returns you can earn (like S&P 500 ETFs), you can maximize your chances of your retirement nest egg. it will be big enough to live.

If you've done your research, believe in Bitcoin's future, and want to add some to your savings, there's nothing wrong with that. Just don't make it your only investment to provide for your future. You may end up seriously regretting it if the virtual currency doesn't stand the test of time.