Should You Have Crypto In Your 401(k)?


How do you wish to save your contributions from your monthly earnings to serve as your retirement package? Do you prefer to save them using the traditional pension account that hardly offers interest on the savings over time? Or would you prefer to save them using a flexible investment package that gives you more value for your lifetime retirement savings over time? These are two different choices employees try to make every day at their workplace. While each of the two retirement savings packages has its advantages and disadvantages, many today still prefer the 401(k) retirement plan as it allows them to grow their savings over time by investing them into promising assets. The major challenge for employees while subscribing to the 401(k) is deciding the best investment package for them. Is it better to invest in stocks or should one add crypto to his 401(k) by buying Bitcoin?

This work has therefore examined the advantages and disadvantages of adding Crypto to your 401(k) retirement savings plan. 

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What is the meaning of 401(k)?

One of the things that have always worried employees while using a pension account is the fact that their retirement savings could lose value over time due to a higher rate of inflation. To guard against this, employers now provide their employees an opportunity to choose a retirement package that allows them to invest their contributions into the assets they choose which have the potential for preserving the value of their contributions over time. This is what has been referred to today as the 401(k) plan. 

The 401(k) plan is a retirement package that allows employees to choose the best investment for saving their contributions from their monthly salary which serves as their retirement package. This allows their contributions to grow over time and survive devaluation due to inflation. 

The choice of the word 401(k) has been derived from the subsection of the US Internal Revenue Service (IRS) code which allowed employees to invest their retirement savings into various investment plans without having to pay taxes on them. 

Should you add crypto to your 401(k) account?

One important area investors experience difficulties while using the 401(k) plan is deciding the package to invest in. The rising popularity of crypto trading has pushed many employees to develop  interest in adding Crypto to their 401(k) plans. Is Crypto a good investment package for employees today? Does it guarantee fair protection for their investment over time?

Our experience of the crypto market has shown that there is no guarantee for returns over time. This means it is a very risky investment to serve as one’s retirement savings package. While some crypto projects have survived the turbulent market conditions over time to maintain a fair price level, a lot have crashed especially during the bear season in 2022. Employees, therefore, need to understand the risks associated with crypto trading before proceeding to add them to their 401(k) portfolios. 

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Advantages of adding Crypto to your 401(k)

  • Some crypto projects have the potential for attaining new all-time-high over time.
  • Helps the employees to increase their 401(k) portfolios.
  • Could serve as a hedge for the rising inflation. 

Disadvantages of adding Crypto to your 401(k)

  • The crypto market is unregulated and could crash over time.
  • Crypto investments are one of the riskiest investment packages today. 
  • Some crypto projects are subject to future inflation when they have no maximum supply. 
  • It is difficult to find a reliable crypto project to invest in today as even the best projects have been attacked in the past.