If you’re serious about including Bitcoin in your retirement portfolio, there are several ways to do so. If your employer provides a self-directed 401(k), you may be able to invest directly in cryptocurrencies through that account. Consult your company’s human resources department to determine whether this is an option or to discuss the possibility of making it available to interested employees.
Additionally, you could open a self-directed IRA. This is similar to a traditional IRA, but it allows you to invest in assets that a traditional IRA does not, such as cryptocurrency. Because this type of account is not as prevalent as standard or Roth IRAs, you’ll need to conduct some research to determine which brokers offer them. Additionally, look into investment options to ensure Bitcoin is a possibility. Not all self-directed IRAs offer the same investment options, and you don’t want to go to the trouble of opening one only to discover that it isn’t what you need.
Perhaps the best course of action for the majority of people is to avoid investing in Bitcoin entirely. Rather than that, invest some of your excess funds in Bitcoin via a cryptocurrency exchange. While you will not receive the same tax benefits as if you held those assets in a retirement account, this method allows you to participate in the market without jeopardizing your retirement savings.
If Bitcoin prices continue to rise, you can always sell your tokens and use the proceeds to fund your retirement. That may be the better option if you’re still young, as withdrawals from retirement accounts are typically subject to a penalty if made before age 59 1/2.
Alternatively, if you believe Bitcoin is too risky for your investment portfolio, you can diversify your holdings with some safer securities. Cryptocurrency stocks are one possibility. A number of established businesses are well-positioned to profit if cryptocurrency becomes a more mainstream asset, but that could also earn you a lot of money even if Bitcoin never leaves the market. Alternatively, you can invest in a good old-fashioned S&P 500 index fund.
Retirement savings are likely to be your financial lifeline during your senior years, so gambling with them is not prudent. Consider your options carefully before deciding to invest your retirement funds in Bitcoin. If you do, ensure that you have a diverse portfolio of other investments to offset the cryptocurrency’s ups and downs.
Some 401(k) Plans May Start Offering Cryptocurrency as an Investment Option
Cryptocurrency, a volatile form of virtual currency, is the newest investment craze. However, should employers include bitcoin and its ilk in workplace retirement plans?
That is the critical point for any company considering facilitating this option for their employees. Many experts and regulators warn that cryptocurrency investing is best left to professional investors.