What to know before you add bitcoin to your 401(k)
WASHINGTON » Fidelity Investments announced that it will allow employers to offer their employees bitcoin in their workplace retirement plans. It was, in many ways, inevitable, but the timing is problematic, as the U.S. economy may be stumbling into some harder times.
Cryptocurrencies are getting a lot of attention, with celebrity hawkers telling folks they are fools to miss out on this next big thing.
Although fewer than 1 in 5
Americans say they own cryptocurrency, a plurality — 43% — say they think cryptocurrencies will become a dominant economic force in the long term, a Quinnipiac University poll found in March.
You have to give people what they want, right?
But what if they aren’t ready for what they want?
Fidelity, one of the largest managers of workplace plans, said employers can allow employee contributions in crypto of up to 20% per payroll cycle and investors can have up to 20% of their total 401(k) account value in a digital assets account. Employers would set the limit for their plans, so they could reduce the percentage.
I’m a skeptic of this speculative investment, even more so given current economic conditions.
In the first quarter of this year, the gross domestic product shrank at an annual rate of 1.4%, according to the Bureau of Economic Analysis. That’s concerning when in the fourth quarter of last year, real GDP increased 6.9%. Coupled with a rise in inflation and the financial fallout from the war in Ukraine, could this be a sign of a recession coming?
The personal saving rate was 6.6% in the first quarter, compared with 7.7% in the fourth quarter. With an end to pandemic-related relief and rising consumer prices, people are having to dip into their savings or save less.
A new poll by Gallup found that 46% of Americans rate their personal finances positively, down from 57% last year. The pessimism is the lowest since 2015. “The current figures are similar to what they were in April 2020 during the early stages of the coronavirus pandemic as well as during the Great Recession in 2008,” wrote Gallup senior editor Jeffrey M. Jones.
The stock market has been turbulent.
“Volatility has surfaced with a vengeance so far in 2022,” Christine Benz, Morningstar’s director of personal finance, wrote in an investing post about the markets.
Cryptocurrencies have taken investors on a journey of spectacular highs and gut-punching