Credit Card Rewards: Crypto or Index Funds

[EchoStache]

I've decided to deposit all credit card rewards and cash back bonus into a separate account and track, but can't decide whether to play with the "free" money in crypto, or go the safe route and just go with index funds.  Probably important to note that I'm old(50), only have $50k saved for retirement, and want to retire by/before age 60.

I suppose the reality of the matter is that this is real money, and I should be wise with it.  Maybe I can't afford the speculative risk of crypto and need to go with the sure thing i.e. index funds?

[waltworks]

Does your income/spending allow you to actually achieve your <10 years goal using conventional investments? If so, do that. If not, and you want to roll the dice, go all in on something like crypto. The chance of success is really low IMO, but if the chance of success using stocks/bonds is zero, that's still better.

-W

[badger1988]

I usually do cash back deposits into my checking account and categorize as miscellaneous "shopping," reducing my total spend in that category.

Any available cash is spent/invested using the same predetermined strategy, regardless of source.

[cool7hand]

What are your goals? Or is this just FU money?

[sonofsven]

I'm a "just put the money back in the monthly budget" voter.
It's free money so I don't overthink it.
The reality is with all these bonuses (I do a lot of them, some quite small) is that the money is kind of floating in the ether: this account receives a bonus, then is transferred to another to get a different bonus, repeat ad nauseum.
I try to keep my main checking account that I pay my bills from as close to zero as possible, so I can transfer the rest to my slush/savings/emergency fund which then funds IRA/HSA/Solo 401K, and sometimes tax payments (property and income). The tax payments generally charge at least two percent to pay with a CC, so I only do that if the cashback is at least two percent or I'm manufacturing spending to meet a spending bonus on a new card.

[Zamboni]

I was right where you are about a decade ago.

In the past nine years my personal retirement accounts have increased nearly $800K through monthly boring slow-and-steady investing in low fee index funds. I max my retirement account options, get a pretty generous employer match, and live on what is left over of my paycheck in a pretty cushy lifestyle by worldwide standard. Barely every think about it other than checking it monthly and rebalancing annually on my birthday.

Seems like this is just a normal state of affairs, so you could have ~a million dollars saved for retirement if you stick with that plan. I voted VTSAX.

[EchoStache]

Crypto really feels like gambling to me.  I'm in a position where I feel like I really need to maximize every advantage I can, without much risk of losing money.  The index funds really seem like the safest bet.

I've got $150 split evenly between Bitcoin and Etherium on Robinhood.  Will start buying index funds with the rewards from here.

I just like the idea of keeping a separate little account to keep track of the total.

I'm only seeing ETF's on Robinhood….any reason I should consider *not* buying the ETF vs just a regular index fund with Vangaurd or Fidelity?  I have a Fidelity account so could open a brokerage account if there is a good reason to.

 

[seattlecyclone]

Credit card reward dollars are no different from other dollars. Why invest them differently?

[EchoStache]

For the psychological aspect of seeing an account balance as a result of messing with cards, cash back, and bonuses etc.  I also see the logic of just using the rewards as part of the regular budget though.

I'm new to *responsibly* using rewards cards, so seeing a clear cut black and white result of the benefits will hopefully keep me motivated to continue maximizing.