Can I roll my IRA into cryptocurrency? If yes, should I do it? These are some of the common questions that those who are headed to their retirement years or would like to invest to have a better financial future are bound to ask themselves. Whereas we are still gradually learning about the rules and regulations that pertain to Bitcoin investments, there’s already enough information to help you proceed on the matter of rolling your IRA into cryptocurrency. If you need to find out how you can do that, then all you need to do is read on.
Many aspiring investors have heard that if they have access to a 401(k) plan, or can open one, then they use it maximally, or should be mindful of how they spend their money so that they can put their savings into one in the future. Such pieces of advice, however helpful, are just the tip of the iceberg when it comes to investing in a bid to get long-term retirement security.
The retirement investment sector is evolving rapidly, to accommodate new types of assets, which have proven useful to investors from all walks. Besides the paper assets that have for a long time dominated retirement investment accounts, we are at that time of the century in which people are opting to diversify their portfolios with alternative assets such as gold, real estate, promissory notes, and cryptocurrencies.
If you have decided that you want to invest in alternative assets, specifically Bitcoin, you can actually get started in a couple of easy steps. Investing in Bitcoin will despite being riskier, present you with more rewards. The price movement of Bitcoin over the last decade has been quite impressive, and it has remained unmatched, in comparison to all the assets that have been in existence before it.
So to answer your question as we proceed with the article, yes! You can roll your IRA into cryptocurrency. There are some details that you will however need to consider before taking this step. For starters, you will need to open a self-directed IRA through a reliable IRA service provider. Now, if you have not come across SDIRAs, they are quite popular for the manner in which they can allow you to allows a larger variety of asset classes that come with extraordinary growth potential.
Reasons to roll your IRA savings into cryptocurrency
Many other investors are already rolling their IRA savings into Bitcoin, for the following reasons:
The chance to catch the wave / the disruptive innovation
One of the things that have given Bitcoin and most other cryptos their reputation on a global scope is their disruptive nature. These digital currencies are here to shake up the banking system as we know it. For years, we have relied on centralized banking systems that have taken away the power from the people. There are many benefits to having a decentralized banking system, which can all be experienced through the use of cryptocurrencies. Investors are purchasing cryptocurrencies in a bid to reap the investment advantages that come from the maturation of the new system of banking (along with the potential growth of the value of cryptocurrencies).
When it comes to retirement investments (or any other types of investments for that matter), experts recommend that you do not put all your eggs in one basket. By tapping into this new asset class, you can protect your portfolio from decreasing in value in the event of a global economic crisis.
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Protection from inflation
Some digital currencies such as Bitcoin were created to have a defined limit on the number of tokens that can be in circulation at a particular time. Such cryptocurrencies actually become harder to get as time goes by, even as their supply in the market increases. This is referred to as adaptive scaling. Paper currency is on the other hand quite easy to get since it can be printed on demand. With a Bitcoin IRA, you can, as such, hedge your portfolio against the inflationary forces of the market.
Hedging your retirement investment portfolio from a “stock bubble”
After about half a decade to one decade, the market price usually corrects for all overvalued stocks. If you’ve not placed your money in the right places, you will suffer the consequences in the form of your retirement savings being turned to rubble. One of the things that you can do to avoid such a scenario is to roll some of your IRA funds into a Bitcoin IRA. This is something that other professional investors are already doing, hence is worth considering.
Shield yourself from the central bank policies
Cryptocurrencies such as Bitcoin are not dependent on the performance of the central bank. As we already highlighted, cryptocurrencies are decentralized, hence there’s no one single body that is controlling the flow of money. This means that you can invest without your retirement funds being manipulated or affected by policies passed by the central bank. Bitcoin investments are safe from the government and the banks.
The IRS Notice 2014-21 stipulates that digital currency such as bitcoin is personal property. With that regard, the gains that one accumulates through investing in Bitcoin can be retained tax-free, until one takes a distribution. Besides, any investors who purchase bitcoin for their IRA and sell it later without taking the funds away from their account can reinvest their capital into other IRA-eligible assets and still access all tax-deferred benefits. You can, as such, purchase the following assets using the money from the sale of Bitcoin, at a later date:
- Mutual funds
- Precious metals
- Private equity
- Real estate etc.
As you can see, you can have a lot of fun moving around your retirement funds without many restrictions. Since you will be managing your assets through a self-directed IRA, you will be the shot caller and will have the liberty to make the investment decisions you know will benefit you the most.
These are just some of the top reasons why should consider investing in Bitcoin through a Bitcoin IRA. You can start by checking out my recommended companies, below, to roll over a portion of your retirement investment funds into a Bitcoin IRA
Thank you for making it to the end of this article that has addressed the question, “can I roll my IRA into cryptocurrency”. I hope it provided you with enough insights to make the right decisions and to get started. Let me know if you have any more questions or concerns about this topic so that I can address them right away – drop your questions or remarks in the comments section.
I wish you well,
Eric, Investor and Team Member at Gold Retired!