How a Bitcoin IRA Works
The cryptocurrency craze has many investors wondering how they can leverage this emerging asset class to boost returns and cash out while the market is up. However, cryptocurrencies are exactly that, an emerging asset class, and one that falls outside the traditional realms of financial services. So as regulators are trying to grasp the rapidly evolving cryptocurrency landscape, investors’ best bet for maximizing returns is to look at cryptocurrencies with a long-term strategy. A great place to start is a Bitcoin IRA.
Bitcoin IRAs provide investors many advantages, but most importantly, they offer a safe and secure way to invest in cryptocurrencies without the transparency or security vulnerabilities of cryptocurrency exchanges and online wallets. Similar to a traditional IRA, a Bitcoin IRA is simply a self-directed retirement account that holds cryptocurrency assets until an investor reaches retirement or rolls the investments over into another retirement account.
Investors interested in opening a cryptocurrency IRA or rolling an already existing account over should first and foremost identify a trusted provider. The best way to identify not only a real but also trustworthy cryptocurrency provider is by checking three boxes:
- It discloses its business’ location
- A real person answers the phone and can provide guidance
- The provider offers insurance for your IRA assets (this is critical to ensuring proper security)
Once you’ve identified a provider that meets the above requirements the process is simple to open your Bitcoin IRA. Your provider will work with you to fill out the necessary paperwork and determine the appropriate allocation of cryptocurrency assets for your investment goals, this could mean investing entirely in bitcoin or a collection of cryptocurrencies. Then, the provider will handle the purchase and transfer of your cryptocurrency assets to a personal cold storage device, this is essentially your ‘wallet’ where you will securely store your cryptocurrency until you wish to alter your asset allocation or you reach retirement and are ready to withdraw. It is imperative that you keep your cryptocurrencies in a cold storage device, meaning it is offline, to ensure your assets are protected from hacking (Most Bitcoin IRA providers will require this, but in the event they don’t investors should take their own precautions). You’re now setup with your Bitcoin IRA!
There are many ways to invest in cryptocurrencies, however a long-term investment is the safest choice for the average investor who may not have ancillary money to lose. Bitcoin IRAs provide investors the opportunity to enter the cryptocurrency market when assets are still affordable while also giving the industry time to mature and normalize. If you’re still curious whether or not a Bitcoin IRA is right for you, call us today and we’re happy to answer any of your questions with no obligations.