With the Bitcoin and crypto revolution accelerating, interest in retirement-focused investment is growing. Whereas long-term savings is always a good idea for anyone seeking financial security, the unique nature of blockchain assets requires greater care and understanding to ensure success.
Do Your Research
With such a rapid pace of development and adoption, seeking to apply cryptocurrency to retirement investment must involve active management and research. Understanding blockchain technology is a must. Also, because Bitcoin is far from the only promising platform, steps should be taken to study the entire crypto space and make investment decisions accordingly.
As the Bitcoin and cryptocurrency space matures, the legal and regulatory status of this new asset class is all but certain to change. Thus, remaining abreast of laws surrounding the purchase, transfer, and holding of cryptocurrencies will be crucial to successfully save for retirement.
Choose a Well-Designed Bitcoin Retirement Plan
In most countries, choosing the proper investment vehicle can have significant tax and regulatory implications. In the United States, for example, almost all retirement savings are commonly placed in an employer-sponsored 401k, or an individual retirement account (IRA). This move results in significant tax savings but also restricts withdrawal until retirement age.
Investors should make forward-thinking decisions on how to maximize tax advantages long-term. IRAs can be easily set up, and Bitcoin can be placed in them via a number of index funds such as the Grayscale Bitcoin Trust. Nevertheless, this type of investment will involve yearly fees. Also, the funds, not the owners, hold the private keys.
A number of companies offer specific Bitcoin IRA services. These include Blockmint and BitcoinIRA. Choosing one of these services may appear less risky, yet still comes with yearly fees and generally the lack of key ownership.
Retirement investing while holding private keys is, without a doubt, a smart move. To do so and still reap the tax rewards afforded to retirement plans requires more work, yet is not especially complex. One move is to create a limited liability company (LLC). It can then purchase Bitcoin or other cryptocurrencies which can be held in cold wallets. Taking these steps generally requires working with a professional.
Remain Consistent And Conservative
As previously discussed, steady and consistent investment strategies have yielded the best results for most crypto investors over the past decade. This plan should sit at the heart of any crypto retirement practice. A diverse portfolio of blockchain assets with a consistent monthly or weekly purchase has the potential to be remarkably profitable in the long-run.
Cryptocurrencies are, without a doubt, a permanent element of the global financial landscape. This fact makes investing in them a wise move, albeit one that is risky and requires proper planning. Taking proper steps now can ensure an impressive, and secure, return.
Do you want to retire on bitcoin? Let us know your thoughts in the comments below!
Image via Shutterstock