The Asset Class For The Millennial’s Retirement Portfolio
Millennials aren’t just into avocado toast
My parents’ retirement portfolio looks similar to others their age, mostly in the market with the majority allocated in bonds with a smaller portion in stocks. This is the typical portfolio of a baby boomer that’s close to retirement. If I compare my parents' portfolio to my grandparents, however, they look vastly different. My grandparents relied on a pension from a previous employer where they worked for decades. They didn’t put much money in the stock market because, at that time, government bonds yielded double-digit interest, so there was little need to be more exposed to risk. So with this in mind, it’s not presumptuous to assume the retirement portfolio of a millennial will look very different than any before.
While the smoke is still clearing from the crypto boom of late 2017, it can be seen that many great things have come from the boom itself. Not only did it give the crypto space exposure to a whole new audience, but it also rallied overall interest in investing. Specifically, when talking about the millennial generation, many investing in 2017 were younger and had no prior investment experience. During my time in the space, a lot of the people I’ve come across are first-time millennial investors that and are heavily invested in crypto-assets, but literally have nothing in the traditional market, such as stocks or bonds.
The lack of investment diversification needs to be addressed. Diversification is the key to success in finance. Right now the crypto space is relatively small when compared to the traditional market, so most people don’t even know what a digital asset is. I’m confident that in time, digital assets will become commonplace in most portfolios, similar to other alternative assets such as precious metals or real estate.
I think that one should consider having a portion of their retirement portfolio in crypto-assets. With the growth of ICOs in 2017 and 2018, it’s just given a glimpse of what the future of investing will look like. These types of investments were previously only for individuals with huge amounts of wealth or corporations such as venture capitalists. Now anyone can invest in these projects that are potentially going to become industry leaders.
Another aspect of the market that’s troubling is that most of the focus is only on short term trading. While it’s necessary to have short and mid-term investing in any market, I find it strange that with so many believers of blockchain technology, there are so few with a focus on long-term investing. We really need to bridge the gap between short and mid-term investing to a more long-term retirement focused strategy for these young investors.
With technology becoming more ingrained in our culture and our economy changing to more of a shared and gig economy, our traditional financial investment paths are going to change alongside the societal evolution. It’s important to stay on top of the latest investment trends and I not only see crypto-assets as an asset class that’s here to stay, I see them growing. I’m confident that the millennial’s retirement portfolio is going to be vastly different than what’s common today, and one thing’s for sure, it’s going to include crypto assets.
