Do you want to use your retirement savings in bitcoins? Well, you should stop for a moment and rethink about it. You might tend to invest your retirement savings in bitcoin because of the high growth. But in my opinion, it is not an ideal option to invest your retirement savings.
But some investment firms are now providing the scope to invest in your retirement savings in the form of cryptocurrency. They provide an Individual Retirement Account where you can save for your retirement. And many firms have the option to invest in them through digital currencies. One of the earliest firms which are the provider of such facilities is the Bitcoin IRA.
Now in this article, I am going to share what you should do; whether to use your retirement savings in bitcoins or not. Let’s start with the Bitcoin IRAs.
Bitcoin IRAs
For investing in cryptocurrencies, there are no specific services for savings for your retirement through Internal Revenue Services. When you invest in a Bitcoin IRA, that means you are referring to the Individual Retirement Account that can hold bitcoin and other virtual currencies in your portfolio.
Due to the high growth of bitcoin, everyone is interested to invest in bitcoin. But it is important to understand whether investing in bitcoin is suitable for you. If you want to invest in bitcoin then you must analyze your risk tolerance and investment goals to make a decision.
Earlier, bitcoin and cryptocurrencies were treated as property like other equities or bonds. So the IRS was considering them as taxable property at that time. But with the development of IRAs, these are now self-directed retirement funds. Now let’s take a look at the pros and cons of the Bitcoin IRAs.
Pros of Bitcoin IRAs
There are several benefits of Bitcoin IRAs:
- You can diversify your retirement portfolio with an IRA specifically centered around Bitcoin and other cryptocurrencies. In doing so, this helps hedge any negative impacts stemming from an economic downturn or any other financial crisis in the future. Investing in a Bitcoin IRA also fights back against inflation. Because Bitcoin is regarded as a safe haven that has a store of value, it is a good vehicle for expanding your retirement portfolio.
- Many investors also consider it as a long-term investment for retirement because the value of bitcoin and altcoins grows rapidly with time. So, they consider it a better option than real currencies.
- Another major benefit of investing in Bitcoin IRAs is to get tax benefits from the cryptocurrencies. But you have to pay some fees for using bitcoin and cryptocurrencies.
Cons of Bitcoin IRAs
Despite the benefits of Bitcoin IRAs, there are some disadvantages that you should consider to make a better decision.
- The value of digital currencies is highly volatile and fluctuates in a wide range. For example, let us consider the case of bitcoin which has a value of $17000 in 2017. But today the value has gone down to $9000. Which is around half the highest value. So, it can be a risky investment portfolio in your retirement savings.
- Bitcoin and cryptocurrency are not globally accepted so it might be a problem if it will be banned by the governments to use bitcoin or other digital currencies. There is very little chance but no certainty.
- Another problem is the fees associated with bitcoin and cryptocurrencies. When you invest it in the Bitcoin IRA you have to pay some fees.
- Finally, every cryptocurrency has a separate fee for its exchange platform that can cost you more. They can charge more than 3.5% for each transaction and other fees to convert your cryptocurrencies to fiat currencies.
Final Words
From the above information, you have understood everything about the Bitcoin IRA, its advantages, and its disadvantages. Now consider each and every point carefully and decide what is better for you. If you want to take the risk you might end up in a high profit or with a loss.
Remember, if you want to save your retirement in Bitcoin IRA then choose a good platform to check all terms and conditions related to fees before you decide. Learn more about investing in bitcoin from BitcoinSupreme. I hope the above information has helped to give some insight into retirement savings in bitcoin.
