The future of bitcoin remains a topic of hot debate, but young people are significantly more likely to trust the cryptocurrency than their older counterparts.
That's according to a new survey from Bankrate, which found that 5 percent of millennials (defined, in this case, as those aged 18 to 37) say bitcoin is the best place to put money they won't need for 10 years or more. Only 1.2 percent of Gen X-ers (ages 38 to 53) favor it for long-term saving, and less than 1 percent of boomers (ages 54 to 72) do.
Relying on cryptocurrency as your long-term investment vehicle could be a costly mistake. Bitcoin has had a rough year: After surging to $20,000 a coin at the end of 2017, it fell to less than $6,000 by June of 2018. Some experts, including CEOs and Wall Street heavyweights, say the digital currency has run its course.
Berkshire Hathaway's Charlie Munger has called bitcoin "worthless, artificial gold," adding that it's "not something I think the world needs."
"The fact that it's clever computer science doesn't mean it should be widely used, and that respectable people should encourage other people to speculate on it," Munger told CNBC's "Squawk Box." "Bitcoin reminds me of Oscar Wilde's definition of fox hunting: 'The pursuit of the uneatable by the unspeakable.'"
Kevin O'Leary, personal finance author and investor on ABC's "Shark Tank," points out that bitcoin is an asset, not a currency. By that he means that its volatility, or quick, sudden gains or drops in value, makes it difficult to use in transactions.
He explains it like this: When O'Leary tried to do a roughly $200,000 deal in bitcoin, the other party would only agree if he was willing to guarantee the value of the bitcoin against the price of the U.S. dollar, for fear the value would fluctuate before the transaction was complete.
"If clearly neither side thinks it is stable enough to transfer in one minute, and they don't even want to take one minute of risk, it is not a currency," he told CNBC Make It in December.
Legendary investor Warren Buffett has also warned investors against crypto. "Stay away from it. It's a mirage, basically," he told CNBC's "Squawk Box" in 2014. "The idea that it has some huge intrinsic value is just a joke in my view."
That doesn't mean that keeping long-term savings in cash, as 30 percent of millennials prefer to do, is the best idea either. Especially when saving for far-off goals like retirement, it's crucial to invest in a way that takes advantage of compound interest and grows your money, Greg McBride, Bankrate's chief financial analyst, tells CNBC Make It.
"The buying power of your investments is going to get eaten away by inflation by about 2 percent to 3 percent per year," McBride says. "So you've got to earn at least that much to preserve the buying power."
Although the stock market can be volatile, too, history shows that investing in it usually pays off: Over the past 90 years, the average annual return for the S&P 500 is over 9 percent.
Here are four ways you can make the most of the money you need for the future.
First and foremost, diversify your investments. You want "something that is letting you be in a lot of different places all at the same time," Andy Smith, a certified financial planner at Financial Engines, tells CNBC Make It.
That means making sure you have a mix of investments across various categories. For example, if you choose to invest in index funds, don't just go with the S&P 500. "You can't just pick one index and think that all of your work is satisfied," says Nick Holeman, a certified financial planner at Betterment. "There's smaller companies in the United States, there's companies in Europe and Asia and Australia and there's bond indexes."
If you are looking to include crypto investments in your portfolio, Mark Cuban suggests only using money you aren't afraid to lose. "If you're a true adventurer and you really want to throw the Hail Mary, you might take 10 percent [of your savings] and put it in bitcoin or ethereum," Cuban tells Vanity Fair. "But, if you do that, you've got to pretend you've already lost your money."
The easiest way to start investing is to contribute to a tax advantaged retirement account, such as a 401(k) or a Roth IRA.
"With a tax advantaged plan like a 401(k) or an IRA, the government is helping you save by giving you a tax advantage, whether that's a tax deduction now on the money you contribute or the ability for that money to grow on a tax-deferred basis, or, in the case of a Roth account, the ability to make withdrawals tax-free in retirement," McBride says. Plus, any employer match on a 401(k) account is essentially free money.
Read up on the different types of retirement accounts to decide which is right for you.
Reluctance to enter the market is understandable, so it's important not to take on more risk than you're comfortable with. "Investing is not for the faint of heart," Holeman says. "The stock market goes up and down very frequently and if you follow the news, you would think that every day is the impending doom for the stock market and that can be scary."
Instead of dwelling on the daily upsets of the market, think about the variables that are within reach. "You cannot control the stock market, that is out of your power," Holeman says. "But you can control your fees, your taxes, your risk, and your behavior."
Even the funds you keep in cash can be put to work. Although the average interest rate on a standard savings account hovers around 0.18 percent, online banks offer high-yield accounts with rates as high as 2 percent.
"If you're going to put money in cash, even for shorter amounts of time, do yourself a favor and make sure you're earning the most competitive return that you can so you can preserve the buying power," McBride says.
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