For the longest time, people have been using traditional individual retirement accounts (IRAs) to secure themselves financially for the future. These IRAs allow people to hold a variety of stock market assets like stocks, bonds, funds, and annuities.
However, the rise in popularity and value of cryptocurrencies has seen many investors shift their focus to crypto to diversify their retirement accounts. And so, Bitcoin IRA was born. So, now you can add cryptos like bitcoin, ether, or binance to your retirement portfolio.
But are Bitcoin IRAs worth it? Below is an in-depth Bitcoin IRA review to help you know all there is before investing.
What Exactly Is a Bitcoin IRA?
A Bitcoin IRA is a type of self-directed IRA. Self-directed individual retirement accounts are basically accounts that allow you to invest in alternative asset classes which are excluded from conventional IRAs, such as real estate, gold, and cryptocurrency.
A Bitcoin IRA, in this case, allows you to hold bitcoin and, depending on the provider, other cryptocurrencies too. You can visit Viva Capital to get to know more about the term- Bitcoin IRA.
What Are the Perks of a Bitcoin IRA?
Bitcoin IRAs offer tons of advantages for investors. Some of these include:
Tax-Deferred Crypto Investing
Since a Bitcoin IRA is a self-directed IRA, it allows you to make long-term investments in alternative assets of your choice while saving taxes on capital gains until you withdraw your profits.
Diversify Your Investment Portfolio
Crypto is an asset class that isn’t affected by stock market assets performance. So, it can help neutralize your risks and bring balance to your bonds and stocks portfolio in case of market uncertainty.
Potential for High Profits
Bitcoin IRAs can offer significant upside potential. Despite fluctuations in the past, top cryptocurrencies have shown consistent growth in the long term. Additionally, given the scarcity of cryptos like bitcoin, the demand should continue to go up.
What Are the Disadvantages of a Bitcoin IRA?
The most significant downsides of Bitcoin IRAs are:
High Fees
Bitcoin IRAs usually charge you an annual custodian fee and a transaction commission. A few providers may also charge a setup fee, with the amounts varying from one Bitcoin IRA to another. So, make sure you‘re clear of all the hidden costs you might expect before creating an account.
No Buying With Crypto
IRS guidelines bar you from transferring your cryptocurrency holdings into a Bitcoin IRA. So, the only way to purchase crypto in your IRA is to exchange it with dollars.
Limited Liquidity
Bitcoin IRA, like any retirement account, has low asset liquidity. Essentially, this means that you can’t withdraw and spend your investment without incurring penalties. All the same, you can always read the fine print to see how you can make an early withdrawal.
Bitcoin IRA Review: What’s the Opening Process Like?
Opening a Bitcoin IRA account is pretty straightforward and doesn’t take much time. Usually, you’ll register online and will need the same type of documentation you’d need to open any other IRA, including:
- Name
- Address
- Contact information such as your email
- Social Security number
- Birthdate
- Driver’s license
You may also need the specified fees to open your account.
Ready to Set Up a Bitcoin IRA?
If you want to invest in cryptocurrency to reap potentially great returns down the line, you should consider a Bitcoin IRA. It saves you costs and makes investing in crypto an easy process. You also get to diversify and stabilize your portfolio.
Now that you have a clear picture of how you can set up a Bitcoin IRA, make use of the insight to get involved with the crypto world and watch your investment grow.
