Retirement and cryptocurrency investing would seemingly mix like oil and water. Your golden years are when you reduce portfolio risk. Cryptocurrency is highly risky, with exhibit A being the the fact that many top coins are down over 50% in the last six months.

That said, there's nothing wrong with retirees diversifying into digital assets, provided they keep a couple of guidelines in mind.

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For starters, you should only invest in cryptocurrency as a retiree if you can comfortably pay your monthly bills with Social Security, your retirement accounts, and any other sources of income you have. Since cryptocurrency can lose value quickly, it's not a good idea to invest money you may need to pay your bills.

Cryptocurrency should also only be a small portion of your portfolio, 1% to 5% max, due to the risk involved. Keep most of your money in less-volatile assets, including stocks and bonds.

While there are many cryptocurrencies, the easiest and safest way to invest is to stick to Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH). The crypto market started with Bitcoin, and it has been the largest coin from the beginning. It's worth about $1.4 trillion as of March 26, which is nearly 60% of the entire market. It's popular with retail and institutional investors as a digital store of value.

Ethereum is the most successful programmable blockchain, enabling developers to launch decentralized apps, new crypto tokens, and other projects. It's also the blockchain where some major financial institutions, including JPMorgan Chase and PayPal, have launched their own stablecoin projects.

Bitcoin and Ethereum are still risky investments, to be clear, and both have declined significantly during the most recent downturn. But they've both been around for over a decade and have recovered from multiple bear markets, making them good starting points for retirees who want to add a little crypto to their investments.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Lyle Daly has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, JPMorgan Chase, and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.

Should Retirees Invest in Crypto? The Answer May Surprise You. was originally published by The Motley Fool