I’m only 40 and my net worth has soared to $9 million with 50% of being in crypto – should I diversify?

There are some people I know who won’t touch crypto with a 10-foot pole. And I have to admit, for the most part, I’m one of them.

Not only is crypto still a fairly new investments, but it’s highly speculative. So it just doesn’t fall within my comfort zone, especially since I’m not sure what regulations and rules might come down the pike.

But that doesn’t mean you can’t make money in crypto, and plenty of it. In fact, in this Reddit post, we have a 40-year-old whose net worth has soared to an impressive $9 million thanks in part to their crypto holdings.

But now, the poster has a problem. They’re looking to retire early because their job consumes them and they want to be a part of their kids’ lives more than they’ve been. But they know they need to reduce the risk in their portfolio by moving out of crypto, and they’re not sure how.

I think this poster definitely needs to diversify if they want to pull off an early retirement. But I also think they should get help going about it.

Why too much of any asset is a problem

I happen to think crypto is fairly risky, so it makes me nervous to see that this poster has 50% of their net worth tied up in it. But to be clear, I think it’s a bad idea to invest that much in any specific asset.

If you were to tell me that 50% of your portfolio is in tech stocks, I’d have the same reaction. I happen to think that crypto is riskier than tech. But even so, I’d say that having half of your assets in a single market sector is bad news.

So what I’d encourage this poster to do is sell at least half of their crypto position and replace it with a combination of assets that could include individual dividend-paying stocks, broad market ETFs, and some fixed income for stability.

Even though the poster is fairly young, if they’re retiring, they need some stable assets in their portfolio. So I’d tell them to focus on bonds, which can be good income-producers without the volatility of dividend stocks.

The poster here needs to get help

It’s great that this poster has managed to amass such a large net worth by age 40. And it’s terrific that their hard work and good fortune have put them in a position where they can consider retiring at age 40.

But I also don’t want their financial plan to blow up in their face. So to that end, I’d recommend that they meet with a qualified financial advisor for guidance on how to reduce their crypto position and replace with it appropriate assets.

To be clear, I don’t think the poster here needs to dump their crypto entirely. Just because it’s not something I like in my portfolio doesn’t mean everyone needs to steer clear.

But I do think they’re overloaded on crypto to a dangerous degree. And it’s a good idea to get a professional involved so they can diversify their portfolio in a suitable manner for their situation.