Fidelity Investments announced it will offer a bitcoin option for the 401(k) plans it administers, though employers will get the final say on whether or not they roll that feature out to their plan participants.
Bitcoin and other digital assets have caught the attention of investors for years, but it’s usually been advised against adding to retirement portfolios – Fidelity Investments might just change that.
These investments are becoming more “baked into the financial system of today and the future” – for trading as well as payments, he added.In just a few years’ time, the number of investors dabbling in cryptocurrencies has grown substantially. About 8% of households used crypto in 2020, but that figure jumped to 22% in 2021, representing 25 million households, according to research firm Hearts & Wallets.
Fidelity is establishing a limit on how much of a 401 plan can be invested in bitcoin – no more than 20%. Employers will then be able to adjust that limit, perhaps choosing 5% or 10%, but no more than 20%, Gray said. Investors can use cryptocurrencies in their 401 plan through a Digital Assets Account, which holds bitcoin and other short-term money market investments, Fidelity said.
“Especially with cryptocurrency, there would have to be an additional level of scrutiny,” Von Wald said. Many financial advisers have said if investors do opt to put a portion of their portfolio into these assets, they should do so carefully and with the expectation that they may lose the money . But others have noted that these investments can provide high returns in the future, and should be treated like any other risky asset in a portfolio – held at a minimum position, for example.
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