By Darren Parkin
by Nigel Green, deVere CEO and founder
US Senator and high-profile Bitcoin advocate, Cynthia Lummis, has once again been arguing the case for cryptocurrencies to be used as part of a diversified financial strategy for retirement planning.
Her latest media round of US networks follows an interview at the CNBC Financial Advisor Summit earlier in the summer, at which she noted that Bitcoin and other crypto assets should become a normal contingent of a diversified portfolio used for retirement funds in order to protect them from inflation.
Lummis warned of the risks that inflation poses to money prudently stashed away for when you retire due to government spending and money printing.
“The Congress spends trillions and trillions of dollars, and is flooding our economy and the world economy with US dollars, there’s no way that we cannot debase the value of the US dollar,” she told CNBC.
Bitcoin is often hailed as a shield against inflation mainly because of its limited supply, which is not influenced by its price.
However, I believe that there are another two defining characteristics that would be influential in encouraging people to increase their exposure to crypto as part of a wider retirement planning strategy.
First, Bitcoin is already the best-performing asset of the decade, and it can reasonably be expected to continue to appreciate in value as more and more institutional investors including pension funds, mutual funds, investment banks, commercial trusts and hedge funds move into the space – which is a trend that’s been building momentum for more than two years.
And second, crypto exposure can typically deliver a legitimate diversification tool – which is how investors can seize opportunities and mitigate risk, especially during periods of higher volatility.
It would appear that Ms Lummis’s rally cry for greater incorporation might be hitting home too.
A recent survey from deVere Group revealed that nearly half (48%) of all baby boomers and Generation X already own cryptocurrency or are intending to buy it before the end of 2022.
This shatters the idle assumption that it’s just ‘digital native’ generations who are investing in digital assets. It seems older ones too are becoming ever more aware of the intrinsic value of digital, global, borderless, tamper-proof and unconfiscatable currencies in an increasingly tech-driven and uncertain world.
But, like the Senator from Wyoming, I would also stress that the crypto sector is still highly speculative.
As such, retirees or those on the cusp of retirement need to bear this in mind and not over-commit, as this could put the wider retirement strategy in jeopardy.
Traditionalists, as they always seemingly are when it comes to crypto-related stories, are up in arms about Cynthia Lummis’s views on using Bitcoin in retirement planning.
But I cannot help but think that in a matter of a few years, it will, as she predicts now, become normalised practice.
To not believe this would be to bet against tech playing an increasingly dominant role in our lives. And who would seriously do that?
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