Should you invest in crypto for your kid’s college fund?

VSrypto is a very volatile asset class, but it also has the potential to generate significant returns. But given the risks, is it a wise investment if you’re saving for your child’s education fund?

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Although there is no single answer to this question, here is an overview of why you might consider it.

Crypto can make a college fund more diverse

“With any financial investment portfolio, it is good to be diversified and we certainly see cryptocurrency as something that should be considered in this diversified investment portfolio,” said Neil Bergquist, co-founder and CEO of Coinme, the country’s largest cryptocurrency cash network.

As for the percentage of a college fund that should be held in crypto, it will depend on your personal preferences, goals, and financial situation.

“There are people on the Coinme team whose vast majority of their investment portfolio is crypto, and there are people on the Coinme team who only have a few percent dedicated to crypto,” Bergquist said.

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Bitcoin has a strong performance record

If you’re considering investing in crypto to help fund your child’s college education, Bergquist recommends investing in coins with proven track records.

“Cryptocurrencies like bitcoin have a fixed supply, are decentralized, and have proven their value over the past 10 years,” he said. “It’s one of the best performing asset classes of all time. There are many predictions, including some from banks like Citibank and analysts, who predict [the value of] bitcoin will exceed $300,000. And there’s a lot of personalities out there who predict [its value] will go much higher. Since it has a fixed supply and its global adoption continues to grow, many people view bitcoin as a good long-term investment. So if you’re looking at a college fund, it’s definitely something that should be considered something to hold in a college fund portfolio.

Consider your time horizon

Bitcoin is a better investment for those with a long-term horizon to save for college than for parents of kids who are already in high school.

“I would say anything over five years old is generally safe,” Bergquist said. “Nobody has a crystal ball and knows where the price of bitcoin is going. There will be ups and downs, it will be volatile, but more time is better.

To counter any major fluctuations, Bergquist recommends using the dollar cost averaging method of investing.

“Instead of betting on a buy price and then a sell price, buy a little bit each month, each week, and just set up a subscription to buy,” he said. “Then you average your buy price, which helps flatten volatility. Many people recommend this as the best way to gain exposure to crypto.

Why you might not want to invest in crypto to pay for your education

One of the main disadvantages of investing in cryptocurrency to pay for education is that the value might go down by the time tuition is due.

“You need to have flexibility in terms of when you need to access the funds,” Bergquist said. “If you need money at a specific time for a specific amount, it might not coincide with the swing of the crypto market at that time. That’s something to consider. is the same with stocks, it’s just that sometimes crypto swings can be a bit higher.

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This article originally appeared on Should you invest in crypto for your child’s college fund?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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