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Ask Chuck: Should Bitcoin be in my Retirement Portfolio?

by Chuck Bentley August 20, 2021

Dear Chuck,

Although I don’t really believe in it, I am thinking of adding Bitcoin to my retirement funds.  What do you think about it? 

To Buy Bitcoin or Not to Buy Bitcoin? 


Dear To Buy Bitcoin or Not to Buy Bitcoin,

First, my disclaimer: I am not an investment adviser and can only give my opinion or counsel, as any friend might do, based upon the Biblical principles I try to follow.

We, as believers, have a responsibility to steward our surplus wisely. Investing is one way that we can give more to God’s work, supplement our income in retirement, and leave a legacy of provision for our family.

How Much Volatility Can You Tolerate? 

At this point in time, the volatility of Bitcoin should rule out the faint of heart or the older, conservative investors near or in retirement.

Some Say Go For It

It can be purchased in a Bitcoin IRA, a self-directed investment account. Check the pros/cons of this approach. What percentage should be held in a portfolio? I tend to agree with this perspective: Below 1% is “too small to matter much,” and above 5% substantially increases risk, so “1 to 5% is a sweet spot,” says Matt Hougan, chief investment officer of Bitwise Asset Management. Two reasons some support investing in cryptocurrencies for retirement include their history of high returns and the potential tax advantages.

Others Say Avoid It

Tuesday, Neel Kashkari, Minneapolis Federal Reserve President, said, “Cryptocurrency is 95% fraud, hype, noise, and confusion.” Speaking at the Pacific Northwest Economic Regional Annual Summit, the central banker accused Bitcoin of futility and sees no case for it in terms of market capitalization. He says it largely feeds into fraud.

No investment is risk-free. The long-term value of digital currencies will depend on how widely accepted they become. Cryptocurrencies have demonstrated great volatility, and future government regulation is not yet known.

Biblical Guidelines for Any Investment Decision

Be informed of risk.

Do your research. Seek the advice of trustworthy, well-informed people.

  • “Without counsel plans fail, but with many advisers they succeed.” (Proverbs 15:22 ESV)
  • “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” (Proverbs 21:5 ESV)

Be sure to diversify.

Diversification provides protection.

  • “Know well the condition of your flocks, and give attention to your herds.” (Proverbs 27:23 ESV)
  • “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.” (Ecclesiastes 11:2 ESV)

Be very wise.

Investing is not guessing.

  • “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.” (Proverbs 21:20 ESV)

Avoid unbiblical reasons to invest. 

  • Greed

“But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.” (1 Timothy 6:9 ESV)

  • Envy

“For I was envious of the arrogant when I saw the prosperity of the wicked.” (Psalm 73:3 ESV)

  • Pride

“As for the rich in this present age, charge them not to be haughty, nor to set their hopes on the uncertainty of riches, but on God, who richly provides us with everything to enjoy.” (1 Timothy 6:17 ESV)

  • Ignorance

“Desire without knowledge is not good, and whoever makes haste with his feet misses his way.” (Proverbs 19:2 ESV)

  • Too Much Risk

“There is a grievous evil that I have seen under the sun: riches were kept by their owner to his hurt, and those riches were lost in a bad venture. And he is father of a son, but he has nothing in his hand.” (Ecclesiastes 5:13-14 ESV)

Put your faith in the Lord, not your retirement plan. Unless you guard your heart, money and investments can become idols.

  • “Whoever trusts in his riches will fall, but the righteous will flourish like a green leaf.” (Proverbs 11:28 ESV)
  • “Trust in the Lord with all your heart, and do not lean on your own understanding. In all your ways acknowledge him, and he will make straight your paths.”

(Proverbs 3:5-6 ESV)

I recently asked a very savvy investor if he thought he should invest in Bitcoin as a hedge against inflation. His reply surprised me. He said, “I can find no redemptive purpose for investing in Bitcoin other than wanting to get in on the wild speculation that is happening with it. I am more concerned about hedging against Judgement Day!”

Have a Plan

Heed Paul’s instructions to the rich: “They are to do good, to be rich in good works, to be generous and ready to share, thus storing up treasure for themselves as a good foundation for the future, so that they may take hold of that which is truly life.” (1 Timothy 6:17-19 ESV)

Have a plan for the potential use of your investment gains. Set written goals, revisit them regularly, and adjust them as needed. Write your plan into your will before the money becomes available. Develop, now, the habit of giving so you understand the eternal benefits that God promised. Then, invest wisely with the hopes that His provision will be stewarded to bless many, whether that includes Bitcoin or not.

In my recent book, Seven Gray Swans: Trends that Threaten Our Financial Future, I discuss digital currencies and other economic threats that we should keep in full view as we navigate a volatile economic environment. I think you will benefit from reading it.

This article was originally published on The Christian Post on August 20, 2021.


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