Cryptocurrency is an unproven investment, and government officials are worried...

Cryptocurrency is an unproven investment, and government officials are worried about its suitability for retirement portfolios. Credit: Getty Images/jygallery

Putting your retirement savings in one investment type has never been a good idea. Putting it in the wrong investment type can be catastrophic.

This is the situation some millennial and Gen Z investors may be dangerously close to. A new survey from Investopedia found that 38% of a typical millennial’s portfolio is invested in cryptocurrency. Another 15% is invested in non-fungible tokens, better known as NFTs. Both investment vehicles have proven to be highly volatile and risky.

At the same time, mainstream financial institutions are making it easier to invest in cryptocurrency. Retirement investing giant Fidelity said it would allow investors in the 401(k) plans it runs for employers to put as much as 20% of their portfolio in bitcoin.

But cryptocurrency is an unproven investment, and retirement experts and government officials are worried about its suitability for retirement portfolios.

Ali Khawar, acting assistant secretary for the U.S. Employee Benefits Security Administration, said the government “has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins and crypto assets.” Khawar cites the potential of “significant financial losses.”

Still, cryptocurrency is an integral part of retirement planning for millennials, with about 25% expecting it will fund their post-retirement lives, according to the Investopedia survey. As for Gen Z, 17% expect cryptocurrency will fund their retirement.

But the reality may be different. “Cryptocurrency has gained mainstream popularity and notoriety,” Khawar says, “but there is still great uncertainty about how the market will develop, and little agreement on investing fundamentals relating to cryptocurrency.”

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