Should You Invest In Crypto for Your Child’s College Fund?

Man counting college savings fund, tuition fee or student loan with calculator.
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Crypto is a highly volatile asset class, but it also has the potential to provide big returns. But given the risks, is it a smart investment if you’re saving for your child’s college fund?

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While there’s no one-size-fits-all answer to this question, here’s a look at why you might consider it.

Crypto Can Make a College Fund More Diverse

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

As for what percentage of a college fund should be held in crypto, that 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 have just a few percent dedicated to crypto,” Bergquist said.

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Bitcoin Has a Strong Performance Record

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

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

Consider Your Time Horizon

Bitcoin is a better investment for those who have a long time horizon to save for college versus for parents of kids who are already in high school.

“I would say anything over five years is generally safe,” Bergquist said. “No one has a crystal ball and knows where the price of bitcoin is going. It will have ups and downs, it will be volatile, but more time is better.”

To counteract any major swings, Bergquist recommends using the dollar-cost averaging method of investing.

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“Instead of betting on a buy price and subsequently betting on a sell price, buy a little bit every month, every week, and just set up a subscription to buy,” he said. “Then you average out what your buy price is, so that helps flatten out volatility. Many people recommend it as the best way to gain exposure to crypto.”

Why You Might Not Want To Invest In Crypto To Pay For College

One of the main drawbacks of investing in cryptocurrency to pay for college is that the value might be on a downswing at the point in time that tuition payments are due.

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

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 

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