Personal financial stress is at an all-time high around the world. According to a recent American study, more than three out of every four people are concerned about their financial situation. This instills anti-risk attitudes and raises concerns about the safety of long-term savings, including retirement funds.

However, this should not be interpreted as hiding money beneath the floorboards. It should also not imply handing over control to a low-growth pension fund, which is likely to lose value at current inflation rates. It entails being more astute in weighing all options and diversifying. And that necessitates liberty.

This is what Alabama Sen. Tommy Tuberville was trying to advocate when he introduced the Financial Freedom Act in May, which would allow all Americans with self-directed retirement plans to add cryptocurrency to their 401(k)s — a type of personal pension account with a defined contribution. It was prompted by a piece of regulatory guidance issued by the United States. In March, the Department of Labor attempted to prohibit 401(k) accounts from investing in cryptocurrency.

Source: https://www.statista.com/statistics/256598/global-inflation-rate-compared-to-previous-year/

Too often, freedom is viewed as the enemy of stability when fear is the true enemy of stability. That is clearly what the US government's caginess regarding alternative assets is causing. Much of the mainstream media has also jumped on the anti-crypto bandwagon.

Caution is always advised in crypto space. It is dangerous to discourage people from completely considering digital assets for retirement portfolios. It prevents people from gaining access to what may be the solution to a failing industry and pension-eroding inflation.

The truth is that the old ways aren't either. Traditional pension funds are in trouble. Due to rising inflation and a volatile stock market in the United States, all but 12 of America's 100 most significant 401(k) funds have posted double-digit losses this year. At the same time, inflation erodes cash purchasing power while interest rates remain absurdly low.

Even the real estate market is not a "sure thing," with many speculating on a housing bubble due to factors such as Chinese property giant Evergrande's impending default. Property ownership is progressively seen as a pipe dream for millennials.

It follows that clinging solely to the old ways — including traditional financial instruments and an antiquated banking system — is no longer a viable option for people seeking future-proof retirement savings.

Cryptocurrencies as a retirement option

Inflation in the United States is approaching a 40-year high, and instability is becoming a semi-permanent fixture in light of climate change and the global turmoil caused by Russia's invasion of Ukraine. Because no one can predict the future, along with pension funds, people should be free to position their bets wherever they see fit, including in their own retirement plans.

Stablecoins, for instance, can be a wise addition to a 401(k) (k). It's simply a matter of selecting the right kind — one that can store wealth and protect against the damaging effects of inflation. As an algorithmic stablecoin, Terra was inherently vulnerable to speculative attacks due to the absence of independent asset backing. Stablecoins backed by physical assets, such as gold, on the other hand, have massive potential as wealth preservation vehicles.

Gold has weathered economic downturns far better than stocks, bonds, and fiat currencies. In 2021, for example, as the pandemic caused fiat currencies worldwide to become volatile, the price of gold remained stable between $1,700 and $1,950 per ounce, demonstrating both its stability and value.

Since the gold standard was abolished, gold's value has increased by more than 500 percent, with central banks ensuring that their reserves remain plentiful.

Because gold is now digitized and infinitely more accessible, it is easier to buy and sell in fractional amounts. According to economist Danielle Di Martino, gold has historically been the least correlated asset class with inflation.

Gold has maintained a positive correlation with rising inflation rates, with an average annual performance of +10.6 percent over the last 50 years, rather than simply offsetting its effects. Gold has surpassed stock markets in times of high uncertainty and price declines and has even outperformed them at times.

Posted 
Aug 20, 2022
 in 
Digital Lifestyle
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