DO NOT GAMBLE WITH YOUR RETIREMENT

You simply cannot afford to lose money with your 401K and IRA accounts.

You need strong investment returns to create a retirement nest egg that can support a very comfortable retirement, but you should not take unnecessary risks to get there.

We often review retirement accounts that include investments in cryptocurrencies and other alternative investments.  Crypto and other investments like this do not belong in your retirement portfolio.

You might push back and point out the recent gains in cryptocurrencies.  But remember that the key to any investment is not where it has been but rather where it is going. 

Bitcoin has doubled in value in the last five months.  But in the 18 months prior to that, Bitcoin dropped by 50% in value.  If you bought and sold at the right time, you could have made a lot of money.  But how does one know when to buy and when to sell bitcoin?

Owning stock index funds also carries some risk in the short term.  The stock market is very volatile.  But in the long run, I would suggest that there is very little risk associated with large cap stock index funds.  Over the last 30, or 50 or even 100 years, the S&P 500 had delivered annual investment returns of about 10%.  That kind of consistent performance gives stock market investors confidence in their returns over the next 20, 30 and 40 years.

Advocates of bitcoin will tell you that it will double in price over the next year.  But it could also drop by 50% over the next year.  Nobody really knows. 

Stock prices in the long run follow the earnings of the companies that they represent.  There is nothing to peg the price of bitcoin against. 

If you own cryptocurrencies in your 401K, you could see huge gains in the future.  But you could also post huge losses.  And if the value of those currencies goes way down, your retirement accounts could suffer tremendously.  You will have no way to make up for those losses.  And you might not have enough time to make up for the shortfall.

If you feel the need to invest in cryptocurrencies or commodities or other alternative investments, use play money for that.  Use money that you can afford to lose. 

Do not gamble with your retirement funds. 

Stay Disciplined My Friends,

Phil

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Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.

Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.