Ever wondered if it’s possible to add crypto to your retirement plan? If not, you probably should. Given the tremendous growth of Bitcoin in the last few years and the incredible returns for early bird investors, many people are now paying more attention to Bitcoin as a possible long-term investment.
But a typical individual retirement account or IRA can only hold assets in stocks, bonds, ETFs, and other conventional securities. How then can you add bitcoin to your retirement plan?
The truth is you can hold Bitcoin, and other digital currencies like Alto, Ethereum, and Litecoin in your retirement portfolio, through what is known as Bitcoin IRA. This type of account is a recent innovation that’s quickly gaining traction.
Here are three compelling reasons why you should consider opening one:
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Diversifying your investment portfolio is critical if at all you want to reduce your risks. Keeping all your eggs in one basket can be a wrong move in case an individual asset’s price happens to take a nosedive.
The stock market is quite volatile and is usually affected by several external factors, including the political climate, interest rates, and natural disasters. As such, in addition to stocks and bonds, you also want to consider alternative assets.
Digital currencies can offer the diversification you’re looking for. That’s because they don’t move in the same way other securities do. When the prices for other assets perform poorly, your crypto investments can help spread out your losses.
Investing in cryptocurrency through a retirement account will save you huge amounts in capital gains taxes. Remember, Bitcoin is considered an investment, and any profits made from trading the coins are subject to taxes by the IRS. Given just how volatile crypto is, these deductions can be hefty.
So, to work around this and enjoy your returns, you can set up a special Bitcoin/ crypto IRA. This kind of account enjoys nearly the same tax advantages as a regular IRA. You’ll be essentially protected from paying taxes for transactions done on the account.
Bitcoin has had its fair share of significant price fluctuation in the past, which is why most people consider it a volatile investment. However, long-term data has shown that the price has consistently gone up since its creation just over a decade ago.
Plus, the fact that there’s a fixed number of bitcoins means the coins will be even more valuable in years to come.
So, while bitcoin may be too risky for someone looking for short-term gains, it works well as a buy-and-hold investment. Therefore, it would be ideal for your retirement portfolio, as you’re essentially creating wealth that you won’t touch for the next several years.
Bitcoin has proven, time and again, that it’s here to stay. So, if you’re looking to grow, diversify, and stabilize your retirement portfolio, adding bitcoin is definitely a must.
There are many Bitcoin IRAs providers on the market today, with different offerings and fees. So, if you’ve already thought about investing in cryptocurrencies, there’s really no reason to keep waiting.
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