Leading crypto exchange Coinbase has partnered with a 401(k)-plan provider known as For Us All to give its employees the chance to use their retirement funds to invest in crypto. The idea is to ensure that all employees of the digital trading giant are not just working in the crypto industry but taking advantage of it as well and benefiting from all it offers.
Coinbase Employees Can Now Take Advantage of Crypto
Individuals will have the opportunity to invest as much as five percent of their overall 401(k) funds into several leading cryptocurrencies including bitcoin, Ethereum and Litecoin. While some analysts are intrigued by bitcoin and its altcoin cousins stepping deeper into mainstream territory, not everyone is excited by the idea. David John, for instance, is a senior policy advisor at AARP policy Institute. While John has nothing against crypto, he feels Coinbase is making a mistake and believes that digital currency is not in any position to serve as a retirement tool.
In a recent interview, he states:
Crypto itself is fascinating and intriguing as it starts to develop, but it is still in its early phases, and it is certainly not appropriate for retirement investing. The fact is that for retirement investing, you want growth, and you want a limited amount of volatility. The older you get, the less you want your portfolio to gyrate up and down because it makes it very hard to plan your retirement income.
Bitcoin being part of one’s retirement is a bit of a conundrum in the sense that while it has certainly come a long way – especially in the past year – the world’s number one digital currency by market cap is still highly susceptible to price swings and related value fluctuations. For the most part, retirement accounts contain the remaining funds for those who have worked all their lives and are now looking to enjoy themselves during their final years.
The money in these accounts is supposed to remain stable and keep one afloat during his or her old age. Granted much of it has been allocated to bitcoin or related cryptocurrencies, the money could wind up disappearing altogether just as easily as it could spike heavily overnight. The unpredictable nature of bitcoin and digital assets makes it an even bigger risk for retirees in many ways.
Some Companies Are Putting the Risks Aside
Still, this is not stopping many companies from wanting to bring crypto into their 401(k) plans according to David Ramirez, the chief investment officer at For Us All. He says that his business has gotten several requests for more information from enterprises throughout the U.S. and claims that this represents a whole new step for Coinbase. He comments:
Relatively small allocations to cryptocurrencies may add material expected return benefits without materially increasing risk. That is the magic of diversification.