How To Buy Bitcoin in Your Retirement Account

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

Sponsored By

Bitcoin has been around for over a decade and has provided outsized gains for long-term investors. The mainstream crypto has come a long way since someone spent 10,000 Bitcoins on two delivered pizzas. Bitcoin touched $67,000 less than a year ago before facing challenges along with the rest of the market. Bitcoin faced similar pressure in 2018 after crashing over 80% from its 2017 high. Long-term investors recouped those gains and more by patiently waiting for Bitcoin to rise in value. 

Bitcoin’s volatile history and long-term returns make it appealing to long-term investors. This new and volatile asset can have a place in your portfolio, and some people are adding it to their retirement accounts. We’ll discuss why Bitcoin has become popular and the advantages of including it in your retirement account.

Invest In Crypto for Retirement

2184 Reviews
Learn how you can invest in cryptocurrency as part of your retirement plan using the self-trading platform iTrustCapital.

What Is Bitcoin?

Bitcoin is a decentralized cryptocurrency that consumers can exchange for goods and services. More brands have been accepting crypto as a form of payment. Bitcoin operates under blockchain technology, enabling it to function without a central authority. Crypto enthusiasts like the cryptocurrency’s transparency and ability to escape the middleman during overseas transfers.

Bitcoin launched in 2009 and has since generated plenty of attention. The popular crypto’s promising prospects and investor buzz caused the asset to dramatically rise from under $0.01 to tens of thousands of dollars for a single coin. Some see Bitcoin as the future global currency, while others see it as a volatile investment with remarkable past performance. 

Other cryptocurrencies have emerged since Bitcoin became mainstream. Ethereum is another popular digital currency and the second-largest by market cap. Altcoins such as Dogecoin and Shiba Inu have also made headlines for their speculative returns and potential as mediums of exchange.

Is It Possible to buy Bitcoin and Other Cryptocurrencies in a Retirement Account? 

The government came up with 401k plans in 1978, and Roth Individual Retirement Accounts came 20 years later. Both retirement accounts offer several advantages, such as superior long-term return and tax advantages. People have filled up their retirement accounts with stock market investments for decades, but what about crypto? Is this new option an IRA-eligible asset? If you want to buy Bitcoin or another virtual currency with retirement savings, you’re in luck. iTrustCapital provides Cryptocurrency IRAs to investors who want to buy crypto in their retirement accounts. The lender offers Traditional, ROTH, and SEP-IRAs.

Advantages of Bitcoin for Your Retirement Account

It’s possible to put Bitcoin in your retirement account, but why would it make sense for some investors? You could put the money into stocks and other assets. Despite the other choices, Bitcoin deserves a place in many portfolios. We will discuss some of the advantages of adding Bitcoin to your retirement portfolio:

  • Diversify Your Portfolio: Portfolio diversification protects you from risk. Instead of putting all of your eggs in one basket, you can spread your funds across many asset classes. You can invest in equities, properties, crypto, and other assets. Each asset has strengths and weaknesses. Some investments perform well during inflation, while others perform better during economic growth cycles. You can add more variety with altcoins. Some altcoins gain significant traction and turn people into millionaires in a few months. Crypto gives your portfolio more versatility to weather downturns and provides more opportunities during economic upswings.
  • Potential For High Returns: Bitcoin is a high-risk, high reward asset that has comfortably outperformed the S&P 500 over the past decade. Bitcoin’s historical returns and price correction make it an attractive investment for speculative investors and crypto enthusiasts. You can get higher returns by holding Bitcoin over the long term.
  • Tax Benefits: Retirement accounts come with several tax benefits. Qualifying Roth IRA withdrawals are tax-free, including the accumulated capital gains. If Bitcoin goes up 10x during the lifetime of your holdings, you won’t get taxed on the appreciation. You can only get this substantial advantage by investing in Bitcoin with your retirement account.

Invest In Crypto for Retirement

2184 Reviews
Learn how you can invest in cryptocurrency as part of your retirement plan using the self-trading platform iTrustCapital.

Disadvantages of Bitcoin for Your Retirement Account

Every investment has flaws. Some assets come with significant risk, while others can feel like dead money. Knowing the advantages and disadvantages of any asset will make you feel more confident with your investment thesis. We’ll share some of the disadvantages of adding Bitcoin to your retirement account.

  • Fees: Retirement accounts come with fees. These small payments provide significant tax protection for long-term investors, but you’ll feel them in the moment. Some providers such as iTrustCapital charge low fees to minimize their impact. Check the fees for a retirement account before making investments.
  • Volatility: Bitcoin is a highly volatile asset prone to dramatic price swings. Bitcoin lost over 80% of its value in 2018, only to surge in the following years. Since touching $67,000, Bitcoin has fallen to under $40,000 per coin. When crypto falls, it can fall hard, but the surges have historically compensated for corrections and crashes. An investor can weather the volatility better with a long-term focus and portfolio diversification. Investing in crypto can be a game-changer, but you don’t want to invest in crypto exclusively. That approach comes with substantial risks.
  • Complexity: Bitcoin isn’t the easiest asset to understand. It’s not tangible like real estate property, precious metals, mutual funds, or other traditional assets. Intangible assets are more difficult to understand. Bitcoin’s blockchain technology is promising, but not everyone grasps the concept. You will also need a digital wallet, private key, cold storage, and other crypto exclusives, depending on how you buy crypto. Once you get past the learning curve, Bitcoin becomes easier to understand and can help you achieve higher returns.

Investors with stronger risk tolerances and more time for appreciation are better positioned to accumulate Bitcoin. These investors have more time to wait for Bitcoin to recover and reach new all-time highs. Investors rapidly approaching retirement may want to consider a small position. Older investors can still benefit from Bitcoin’s appreciation without straining their portfolios if Bitcoin stumbles in the short term. You can reduce risk in your retirement plan while potentially achieving significant gains. Do your due diligence and assess your risk before buying crypto or any other asset.

Investors approaching retirement should consider how their retirement funds will cover living expenses more closely. Dividend stocks and rental cash flow make more sense for investors who will soon rely on their assets to cover everyday costs. In addition, a portfolio with less volatility won’t have dramatic price swings, making your nest egg feel safer.

How to Start Buying Bitcoin in Your Retirement Account

Buying Bitcoin in your retirement account has many perks. A Bitcoin IRA provider lets you accumulate tax-free capital gains on your crypto. Some investors should have saved over $100,000 in capital gains by stashing their early crypto holdings into an IRA. Anyone under 50 can contribute up to $6,000 per year to their IRA. Investors who are 50 or older can invest $7,000 each year into their IRA accounts. Many investors should max out contributions to their retirement accounts for enhanced upside. Retirement is a long-term process with many twists and turns, and iTrustCapital can help. 

iTrustCapital can set you up with a self-directed Bitcoin IRA account. Their IRA accounts only come with a 1% transaction fee and no other costs or fees. iTrustCapital has other retirement accounts available and lets you add various assets to your account. You can navigate to the iTrustCapital website to learn more about their Crypto IRA account or open an account today.

iTrustCapital

You may also like

Roth IRA and 401k accounts help with retirement, but each has its pros and cons. Is it possible to have both? We’ll share the answer.
Read more

Advertisement Disclosure

Product name, logo, brands, and other trademarks featured or referred to within Banks.com are the property of their respective trademark holders. This site may be compensated through third party advertisers. The offers that may appear on Banks.com’s website are from companies from which Banks.com may receive compensation. This compensation may influence the selection, appearance, and order of appearance of the offers listed on the website. However, this compensation also facilitates the provision by Banks.com of certain services to you at no charge. The website does not include all financial services companies or all of their available product and service offerings.