As you know, an IRA account, such as Roth IRA, is a savings account that enjoys various tax advantages that you can use to save and invest for your retirement.
However, a regular IRA account can only hold conventional assets like stocks, bonds, and funds. So, what happens when you want to invest in other, less traditional securities? You can do so through a self-directed IRA.
A self-directed IRA is simply an individual retirement account that allows you to invest in alternative assets like cryptocurrency, real estate, and physical gold. A Bitcoin IRA is essentially a self-directed IRA that you can use to hold and trade cryptocurrencies such as bitcoin, ether, and other digital currencies.
To add cryptocurrency into your Bitcoin IRA, you have to fund the account with fiat money, after which you can use the money to buy your preferred coins.
Let’s take a look at four reasons why a Bitcoin IRA is a better option than your Roth IRA.
1. They Help to Diversify Your Portfolio
Cryptocurrency is an asset class that is in no way correlated with bonds and stocks and it makes up most of what many US citizens have in their retirement accounts. For this reason, it can offer better protection to your retirement portfolio in the event of a significant market downturn or other tumultuous activity.
2. They Hold Potential for Higher Returns
While Bitcoin and other cryptos are regarded as volatile in the short term, they hold great potential for excellent returns in the long haul, much better than Roth IRA.
For instance, Bitcoin stood at $5,200 on March 15, 2020, but ended the year close at almost USD 30,000. That’s more than 500% growth in about nine months. Elsewhere, Ethereum, the second biggest crypto, was up over 400% in 2020.
As you can see, the best thing about crypto is the promise of growth for your investment, more so if you are in for the long haul. And if you also consider the fact that you are only investing a small portion of your total IRA value, the associated risk is not entirely a concern.
3. They Offer Lucrative Tax Advantages
The biggest issue you might face as a Bitcoin investor is monitoring trades and calculating taxes owed. You owe the government taxes every time you sell crypto at a profit, which can make it challenging to keep tabs on your purchase prices and gains.
On the other hand, investing in a tax-advantaged account eliminates this burden since you won’t be taxed on anything, given that the money and securities stay in your account.
4. They Offer Incredible Flexibility
Bitcoin IRAs give you the power to decide what you want to do with your assets. Also, most Bitcoin IRA providers work with reputable crypto exchanges. That means you can trade the coins you’ve stored in your account and make profits easily.
Sign Up with a Reputable Bitcoin IRA Provider to Take Advantage of These Benefits
If you are a patient investor and want to grow your nest egg faster, you should definitely consider a Bitcoin IRA. There are a dozen providers in the market but you want a company with proven experience in managing IRAs and alternative assets like cryptocurrencies. As such, try and make sure that you do due research before getting started.
