Millennials have solved the retirement crisis... with crypto!

[poochyena]

Summary

 

A quarter of people aged between 26 and 41 say they will be able to rely on their cryptocurrency investments to support them in retirement.

 

Quotes

Quote

A new survey of 4,000 people by Investopedia found that more millennials own cryptocurrencies than own stocks. (Some 38% own crypto, just ahead of the 37% who own stocks.) And 28% of millennials say they are planning to rely on their cryptocurrencies to support them in retirement.

If people are relying on cryptocurrencies for their retirement, what could possibly go wrong?

 

My thoughts

It always shocks me to learn just how many people own crypto. I'm one of the 37% who own stocks, and I think stocks are an infinitely better long term investment than crypto. Stocks at least have some basis on their value, companies. Stocks are propped up by companies reporting good financials, and outside of a temporary recession, its incredibly unlikely for the entire market to crash long term. That makes a diverse stock portfolio fairly safe. Crypto on the other hand? The entire market could crash to 0 tomorrow with no warning and never recover. Cypto is far more like gambling than a long term investment. Anyone invested in crypto shouldn't be holding onto it for multiple years.

 

Sources

https://www.marketwatch.com/story/millennials-have-solved-the-retirement-crisis-11649199310

[Deadpool2onBlu-Ray]

1 minute ago, poochyena said:

Summary

 

A quarter of people aged between 26 and 41 say they will be able to rely on their cryptocurrency investments to support them in retirement.

 

Quotes

 

My thoughts

It always shocks me to learn just how many people own crypto. I'm one of the 37% who own stocks, and I think stocks are an infinitely better long term investment than crypto. Stocks at least have some basis on their value, companies. Stocks are propped up by companies reporting good financials, and outside of a temporary recession, its incredibly unlikely for the entire market to crash long term. That makes a diverse stock portfolio fairly safe. Crypto on the other hand? The entire market could crash to 0 tomorrow with no warning and never recover. Cypto is far more like gambling than a long term investment. Anyone invested in crypto shouldn't be holding onto it for multiple years.

 

Sources

https://www.marketwatch.com/story/millennials-have-solved-the-retirement-crisis-11649199310

People are dumb, what can I say?

[NinJake]

I get it. But it's not for me. No thanks!

[YoungBlade]

My guess would be that most people surveyed didn't understand the question. I don't directly buy stocks, but I do have a 401k, which is a form of mutual fund, which is an investment in stocks. So if someone asked me "do you own stocks?" then I would say "yes," because I have a 401k, even though I don't personally select the stocks that I own.

 

I'm sure most of the people surveyed have a mutual fund of some sort, which means they do actually own stocks, but because most people equate "owning stocks" with going and picking stocks through a broker and buying and selling them, they likely said "no" in spite of having a mutual fund.

 

However, I also have money in crypto, so I'd actually be answering "yes" to both questions. That said, I have much more money in my 401k than I do in crypto, and the crypto is all income from casual mining - I haven't directly used money to buy crypto.

[AbydosOne]

I feel like Investopedia might have a biased pool of responses, just sayin'. And also 4000 people is a pretty small number of millennials...

 

I have quite a bit of stock (thanks company matching!), a 401k, and precisely zero crypto.

[jones177]

6 minutes ago, NinJake said:

I get it. But it's not for me. No thanks!

It reminds me of the people I knew bragging about their 401k before the crash or me with my property before 2008. 

I retired on a good old fashion pension and my property still has not recovered all the way. 

 

[BuckGup]

I think it's telling of the position the generation is in. They know stocks exist and there are thousands of apps to trade within seconds you can download for free, there's also social security, as well as traditional ways of retirement like a ROTH IRA or 401K. Yet they still opt to go for the riskier, less vetted, but substantially more promising solution. Perhaps there really isn't a choice for them given the current state of wealth distribution and fraud in the world so this is the best of the very slim options available. Also these people and generation are the future old people. So it's hilarious to see all the old people calling them stupid and dumb as they are die off and the new old people will be perfectly fine with crypto. It's how change works if you don't like it tough titty people bitched about credit cards, chalk boards, paper books, newspapers, and fictional novels when they came out. 

 

On a sidenote I fully stand with these people as it's the most logical thing to do. My 401K has been growing slowly but requires me to continue working until I retire to use it. Crypto on the other hand I have made thousands doing absolutely nothing and I can use it whenever and however I want with no JPMorgan trying to take as much as possible. Big banks aren't dumb either as VISA and mastercard now sell licenses so anyone can white label a debit/credit card and make it unique somehow. I've seen everything from crypto/stock/gold based debit cards. Manna cards that pay you crypto when you get achievements online that are credit cards that build credit too. Or credit debit cards that use a pooled account type like Cashapp that allow you to build credit without actually opening a line of credit or having a credit report done. People are truly clueless to the society they live in

[BuckGup]

6 minutes ago, AbydosOne said:

I feel like Investopedia might have a biased pool of responses, just sayin'. And also 4000 people is a pretty small number of millennials...

 

I have quite a bit of stock (thanks company matching!), a 401k, and precisely zero crypto.

What's funny is depending on your bank they could be investing in crypto for your 401K.

[Hairless Monkey Boy]

There is probably some misreporting in this self reported data. Some people don't realize they have a 401k. Of those who do, many don't realize that that money is going into a "Target Date" fund by default if they make no selection. Of the ones who do, many don't realize that that target date fund itself owns a selection of stocks (and bonds etc). I have a friend who fits firmly in that last category.

 

Basically, I don't trust the data here.

 

6 minutes ago, YoungBlade said:

I don't directly buy stocks, but I do have a 401k, which is a form of mutual fund, which is an investment in stocks.

Even this isn't quite true, and I'd consider you to be informed above average based on this response. Your 401k is not a mutual fund. It is merely an account which has special rules. Having a 401k account does not necessarily mean that you own stocks. It could be empty, you could own bonds, or you could have your money in a "Cash Equivalent" fund which isn't much different from a savings account. But if you own mutual funds (or ETFs or individual stocks of course) within your 401k or other retirement or HSA account, then you own stocks.

[Heliian]

The generation that can't "afford to buy a house" can afford to throw money at crypto as a retirement plan? 

 

Crypto isn't a plan at all.  

[Hairless Monkey Boy]

24 minutes ago, BuckGup said:

My 401K has been growing slowly but requires me to continue working until I retire to use it. Crypto on the other hand I have made thousands doing absolutely nothing and I can use it whenever and however I want

This is not quite true. 401k is special in that it allows you to invest with pre-tax money, or in the case of ROTH, it allows you to invest with after-tax money that will be grow tax free and that you can withdraw tax-free in retirement. You also may have access to a company match which is just free money. To get this very lucrative arrangement, you promise not to make yearly contributions that exceed a certain amount, and that you won't withdraw the money earlier than a certain date. You can still use it whenever and however you want, but if you do, you have to pay back that tax you didn't pay, and a penalty because of the extra growth which occurred because of the tax you didn't pay. It's more like losing an amazing advantage, than paying a penalty.

 

When you buy crypto, you are using after-tax money, and you will be taxed on the capital gains.

 

I'll take the ROTH 401k/IRA any day. And don't get me started on HSA.

[darknessblade]

That will only be viable until the IRS starts going after NFT owners, after Crypto becomes FULLY regulated/ any service that converts crypto to real money, or being under a magnifying glass where even the slightest error, will cause a full investigation, into said crypto wallet

[BuckGup]

9 minutes ago, Hairless Monkey Boy said:

This is not quite true. 401k is special in that it allows you to invest with pre-tax money, or in the case of ROTH, it allows you to invest with after-tax money that will be grow tax free and that you can withdraw tax-free in retirement. To get this very lucrative arrangement, you promise not to make yearly contributions that exceed a certain amount, and that you won't withdraw the money earlier than a certain date. You can still use it whenever and however you want, but if you do, you have to pay back that tax you didn't pay, and a penalty because of the extra growth which occurred because of the tax you didn't pay.

 

When you buy crypto, you are using after-tax money, and you will be taxed on the return on investment.

 

I'll take the ROTH 401k/IRA any day. And don't get me started on HSA.

True I did forget you can roll a 401K into a Roth, take a loan out from it, use the CARES ACT for hardship, or just pay the 10% penalty. With that said, this is a personal preference thing but, the performance of crypto is eons better than stocks could ever be. I can make more money off crypto in one week than a 401K in 2 years so it's really just not a good investment compared to crypto. I personally would rather take more risk but reap the benefits and not work the rest of my life to finally start living at the age of 65 

[GhostRoadieBL]

I hold investments on both sides, crypto and stocks, but neither of them are guaranteed to be securing my retirement.

We've seen so many crypto fails and sanctions tank the value that it just makes no sense to rely on any coin holding value for the next few decades.

[YoungBlade]

24 minutes ago, Hairless Monkey Boy said:

Even this isn't quite true, and I'd consider you to be informed above average based on this response. Your 401k is not a mutual fund. It is merely an account which has special rules. Having a 401k account does not necessarily mean that you own stocks. It could be empty, you could own bonds, or you could have your money in a "Cash Equivalent" fund which isn't much different from a savings account. But if you own mutual funds (or ETFs or individual stocks of course) within your 401k or other retirement or HSA account, then you own stocks.

My particular 401k does have stocks and I'd imagine most millennials would have the same. I know that, as I get older, those investments will shift to lower interest, lower risk ones, and that could mean that the stocks are dropped for bonds or other investments, but someone in their 30s will likely have stocks in their 401k, as that's a good long-term investment that most financial institutions would choose by default.

 

I was not trying to be precise there, but the result was inaccurate. A 401k is like a mutual fund, but is not one in and of itself.

 

The options with a 401k are vast, and I have not taken the time to learn all the possibilities, but I was just referring to people who have one from work and use it in its default form. In that case, a 401k almost certainly contains stocks for someone in their 30s. Although yes, it is possible that it does not and it is wrong to refer to it as just a mutual fund.

[porina]

47 minutes ago, YoungBlade said:

My guess would be that most people surveyed didn't understand the question.

Flip it the other way. It might be that the survey question was phrased badly, and this is something I find annoying when trying to answer surveys.

 

For example, if you ask me if I held stocks and/or crypto right now, I'd answer yes to crypto, no to stocks. I have a tiny amount of crypto somewhere, and I don't think I ever held stocks for more than the time it took me to sell it. I could buy discounted stocks at my previous workplace and the safest option was to sell as soon as I get it, since I'd profit to the amount discounted. If I wait I'd be at risk of market conditions.

 

However, I indirectly do hold stocks. I have no idea what they are, nor do I have direct control on them. My actual pension fund I pay into. In a quick scan it is essentially like a 401k.

 

42 minutes ago, AbydosOne said:

And also 4000 people is a pretty small number of millennials...

Probably enough to be statistically significant. For large populations it tends towards a fixed number than a proportion. But I was never good at stats.

[leadeater]

2 minutes ago, porina said:

Flip it the other way. It might be that the survey question was phrased badly, and this is something I find annoying when trying to answer surveys.

Ask a question in a way to get the answer you are looking for, 99% of surveys.

[poochyena]

56 minutes ago, YoungBlade said:

I'm sure most of the people surveyed have a mutual fund of some sort

Why do you assume that?

 

52 minutes ago, AbydosOne said:

And also 4000 people is a pretty small number of millennials...

Not for a survey. This is high school statistics level of math.

[tikker]

1 hour ago, poochyena said:

It always shocks me to learn just how many people own crypto. I'm one of the 37% who own stocks, and I think stocks are an infinitely better long term investment than crypto. Stocks at least have some basis on their value, companies. Stocks are propped up by companies reporting good financials, and outside of a temporary recession, its incredibly unlikely for the entire market to crash long term. That makes a diverse stock portfolio fairly safe.

I don't think there's anything shocking about people owning a potentially very profitable asset and your last sentence basically sums it up. Stocks are safe and the classic slow and steady growth (though Nvidia stock did incredibly well over the pandemic and was at +70% or something at some point). Crypto is risky, but potentially quick. At the end of the day it all comes down to your portfolio and having a healthy diversity. How much risk you are willing to take is up to you. Some people will (rethorical example) hold 10% crypto 90% stocks, others play risky and go 90% crypto 10% stocks.

 

Playing the devil's advocate one could even say if you just own stocks you aren't diverse either. What if the stock market crashes like the big dip due to the pandemic? Your money is just as well gone as if the crypto market would collapse. It's just more likely that crypto will see a large dip, but stock markets are not invulnerable. Crypto has become just another, risky, way of diversifying your assets.

 

1 hour ago, poochyena said:

Crypto on the other hand? The entire market could crash to 0 tomorrow with no warning and never recover. Cypto is far more like gambling than a long term investment. Anyone invested in crypto shouldn't be holding onto it for multiple years.

It is indeed. The thing is, young people (ignoring the undoubtedly present old geezers with big bags for a minute) can risk this as they on average will have time left to regain the lost capital (to a reasonable extent). Stocks won't do nearly the gains crypto has/had a tiny chance to do and that makes it attractive. Granted, many don't understand the huge risk, but many also do and are willing to take it.

 

Generally you still should hold for a long time as well. In 2019 1 BTC was around $10,000. If you had held since then, even in the slumbering crash now, you'd have $43,000. You just didn't know it was going to end up here, which is always the game. It's extremely risky, but the big bucks will always come long term. For the same reason you should also sell if you are happy with the profit you'll be making if you sell at that moment. Once you have your initial investment back (and maybe some extra profit) it also doesn't really matter what happens and you can just sit back and watch what it does. Personally I also think crypto, while still incredibly risky, hasn't really been 'it can disappear any second now' risky for the last few years. Yes your investments could still be obliterated if you bought at the wrong time or bought not-so-smartly, but that's the risk you accepted when you went into crypto.

 

1 hour ago, Heliian said:

The generation that can't "afford to buy a house" can afford to throw money at crypto as a retirement plan? 

 

Crypto isn't a plan at all.  

Top be fair, buying a house is kinda hard when you need like 400k , mortgage will give you maybe 100k and rent is expensive enough that you can save maybe of the order of 5k per year during in the short period between  graduation and buying (or wanting to buy) a house if you do nothing but put your leftover money in savings. So it's not as simple as if you can afford to buy crypto you can buy a house instead.

 

[Edit] going by the age groups my surprise is slightly lessened further. My speculation is that the 26-41 year olds are probably more likely to have bought crypto early on and are now seeing the profits. People starting now and the younger generations probably don't and won't see such massive growths as the past few years happening anymore, making it less attractive.

[poochyena]

13 minutes ago, tikker said:

I don't think there's anything shocking about people owning a potentially very profitable asset

A lottery ticket is "potentially very profitable" and also equally as ridiculous to purchase and expect to use it for your retirement. Cypto is a get rich quick scheme, not a long term investment. The framing of this thread is in relation to retirement funds, not chance of getting rich quick.

15 minutes ago, tikker said:

Stocks are safe and the classic slow and steady growth (though Nvidia stock did incredibly well over the pandemic and was at +70% or something at some point).

right, stocks can skyrocket just like crypto, but with much less risk. AMD is up 660% in 5 years (I'm up over 500%, personally). Crocs nearly 1000% (2600% if you sold in 2021), tsla 1600%, etc.

17 minutes ago, tikker said:

Playing the devil's advocate one could even say if you just own stocks you aren't diverse either. What if the stock market crashes like the big dip due to the pandemic?

Then you... do nothing. Just hold onto the shares since it will go back up within a few months or years. Crypto has a MUCH higher chance of crashing and never recovering since there is nothing actually attached to it's value.

20 minutes ago, tikker said:

Stocks won't do nearly the gains crypto has/had a tiny chance to do and that makes it attractive.

Not true, as mentioned above.

22 minutes ago, tikker said:

You just didn't know it was going to end up here, which is always the game. It's extremely risky, but the big bucks will always come long term

With stocks, you DO have some idea of where it will go. I saw AMD was making good chips and knew they would see increased revenue. With crypto, its almost entirely luck. There is no expectation of gains through long term investment from crypto like there is from the stock market.

[YoungBlade]

55 minutes ago, poochyena said:

Why do you assume that?

Because it would be odd for people in their 30s to not have a 401k or IRA or some other type of retirement account that is almost always going to contain a mutual fund. Unless most millennials just aren't saving for retirement at all, which I guess is possible, but the 30 somethings I know all have some kind of retirement account.

[Bitoshi]

This does seem pretty crazy to me, but having been in crypto a while I could see why some people might do this given previous price action, the crazy inflation we're getting, and the belief that crypto will replace the financial system. Although I've also seen enough hacks/scams/ponzi schemes to know it's a bad idea. 

 

People tend to neglect that blockchain technology is a rapidly changing field that's still in it's infancy, much like the internet once was. It's not clear right now what investment is the best, or what technology or cryptocurrency will survive, or where exactly blockchain technology will take us in the next 10-20 years. It seemed like a good idea to invest in Ask jeeves, Yahoo, or Myspace for a time, but in the long run it didn't pan out well. In hindsight investing into Amazon or Paypal was smarter, but it wasn't obvious that online shopping would become so popular.

 

I believe there is still a ton of money that can be made but I think think it might come from investing into blockchain tech rather than any particular cryptocurrency. Blockchain technology could greatly improve electrical grid efficiency, provide cheap and highly secure cloud based storage/computing power, be at the forefront for web 3.0 and decentralized financial systems, and do many other things that we probably can't even imagine right now. Investing in companies related to those technologies could be very lucrative. 

 

 

[poochyena]

8 minutes ago, YoungBlade said:

Because it would be odd for people in their 30s to not have a 401k or IRA or some other type of retirement account that is almost always going to contain a mutual fund. Unless most millennials just aren't saving for retirement at all, which I guess is possible, but the 30 somethings I know all have some kind of retirement account.

I googled it and its not true https://www.wcpo.com/news/most-americans-missing-money-by-not-investing-in-401k

[YoungBlade]

Just now, poochyena said:

I googled it and its not true https://www.wcpo.com/news/most-americans-missing-money-by-not-investing-in-401k

Yikes. That's not going to end well in 30 years...

[poochyena]

29 minutes ago, YoungBlade said:

Yikes. That's not going to end well in 30 years...

what do you mean? They all have crypto to support them! /s