Owning a traditional or Roth IRA may not be enough to navigate the challenging financial situations we find ourselves in today following the covid-19 pandemic. With so much uncertainty about the future, it will be wise to act quickly and consider other investment options.
While there are many long-term investment options such as stocks, bonds, and real estate to choose from if you are looking to secure your future, there is another option that many people are considering this period. And this is an investment in bitcoin and gold IRA.
If you already operate an individual retirement account, you may already have heard about it. But for those who are new to the idea, you will find below a simple breakdown of what an IRA is and why you should consider investing in the bitcoin and precious metal options.
Individual Retirement Account
This is a type of account reserved for saving towards retirement. It comes with tax benefits which allow the individual to accumulate interest on the money deposited over a period lasting throughout their active service year till when they no longer work. This is ideal for people in active employment looking for a way to make good use of their pay while they are earning monthly. It is open to anyone who earns an income including self-employed individuals and small business owners.
The different types include the Roth, traditional, SEP, and Simple IRA and they all have their specific criteria for eligibility, withdrawals, and taxation. It looks more like a long-term fixed deposit account in that you are unable to withdraw your deposits until you get to the age of 59.5. And should you choose to make withdrawals before then, it will come with a penalty.
This rule is the same for whether you choose traditional, Roth, or the more self-directed bitcoin or gold IRA. You can check this link https://www.nerdwallet.com/article/investing/types-of-iras for more on the different types of individual retirement accounts.
Why Opt for a Bitcoin or Gold IRA?
There are many reasons why many individuals go for a self-directed bitcoin or gold IRA. And while the other options of traditional or Roth IRA are still viable options for saving towards retirement, there are many reasons why a self-directed option may be best. Below are reasons why you want to consider a bitcoin or gold IRA.
Great for Diversification
By investing in bitcoin or precious metals like gold or silver, you will be diversifying your asset portfolio which means that you get other investment portfolios that could be useful in times of financial distress. If there is anything we have learned from the covid-19 pandemic is that money is gradually shifting from the traditional methods of banking.
During the lockdown, it was difficult to meet with financial asset managers face to face talk more about using traditional banking. Even with online banking, people with assets in cryptocurrency were better secured as they could access their blockchain from anywhere in the world.
For an asset type that is completely different from the normal options such as bonds and stocks, you will be sure that you have other financial assets that can come in handy in times of distress.
While it is not a bad idea to hold money in bonds, real estate, and the stock market, investing in bitcoin and gold will surely have its benefit going down the road. This page has more on diversifying your asset portfolio.
Tax Advantages
There is also the issue of losing money to taxes when you invest in real estate or stocks, and this value could take a chunk out of your profit when your investment matures. But in the case of cryptocurrencies and precious metals, you will be covering up with the soaring value of your asset type. But with an IRA, you enjoy tax advantages as there is no compounding tax interest as your investment matures. And since you won’t be making withdrawals till a set date, you surely have nothing to worry about with a self-directed IRA.
High Return Potential
One thing you may already know about cryptocurrencies is their high volatility rate. This means that you could be raking in massive profit on money invested if you choose to set money in a Bitcoin IRA. There is no set value for the price of bitcoin, and as you already know, the cryptocurrency sold for $1 as of February 2011 and has a value of over $60,000 as of the end of October 2021. This means that if you are patient enough to hold a few $1000 worth of the cryptocurrency in your account for the next 10 years, you could be raking in massive profits.
But you should know that there is no assurance of continuous increase due to its volatility. Still, there is a lot of possibilities that you will make good returns on your investment, compared to holding the money in a savings or fixed deposit account. Gold also has a good tendency to appreciate since it is one of the most sought-after precious metals with numerous industrial applications. Known also to be of immense value to the wealthy class, having investments in gold will surely help with protecting your future after retirement.
Investing in Bitcoin or Gold IRA
You can check with a financial adviser to discuss your plans of investing in gold or bitcoin IRA, and they will put you through the procedures. They will also be able to suggest the best custodians to help with holding and maintaining your account. Online platforms like metal resource also do a fine job of providing you with all the information required to bring you up to speed about opening and investing in an individual retirement account.
You should be aware that there are fees set by custodians to help with maintaining your account throughout the length of your investment period. And this could be in the form of a recurring monthly fee or a percentage charge. But at the end of the day, you will be making more profit as there is a good chance of maximum gains when you choose a self-directed IRA.
