Bitcoin investment is all we hear about nowadays. It’s the king of cryptocurrency, but what does the future look like for Bitcoin, and those who invest in it? Is it really solid for retirement?
Spoiler alert: it’s good, but not the end of the line for investing. Retirees need to focus on diversification and building a steady portfolio with plenty of assets, but that doesn’t mean they need to avoid the salivating prospect of striking it bi with Bitcoin (and keeping some for the long-haul).
We’re going to talk about Bitcoin IRAs, the probability of hitting it big with Bitcoin now, and just how long Bitcoin really has into the future. Investing in crypto is part of the new financial generation; you can't afford to be left behind.
A Detailed Look at Bitcoin Investing for Retirees
Bitcoin is new(ish), and time-tested assets like stocks, gold, and bonds are not. New things tend to be somewhat scary to dip your feet into, but at some point in time, every one of these investment options were new.
We’ve seen plenty of cryptocurrency coins rise and fall in price, and the problem is that they’ve all been relatively unstable. Bitcoin helped shape the market, and as such, it’s the ultimate cryptocurrency.
The price continues to rise, and with it, the chance for making five-figure gains feels like it’s lost. If Bitcoin continues to go up in price, as it is expected to do, the chance to earn a small fortune rises as well.
Any cryptocurrency is volatile. At the time of writing this, it has dropped by nearly $10,700 in value over the last 30 days, but has risen nearly $17,900 YTD.
It fluctuates a lot, so where’s the potential income gain? It comes from Bitcoin IRAs, where you can receive dividend payments based on your Bitcoin holdings.
While these dividends are nice, they also fluctuate with the price of Bitcoin, so your reports from your IRA firm may look a bit skewed.
With it being relatively unstable, Bitcoin isn’t an entire investment strategy, but it can be part of a healthy portfolio. We’ll go into more detail in a moment about what you should do to include Bitcoin in your current retirement plan, and why it’s not too late to get started if you’re just now accruing enough wealth at a seasoned age.
Is Bitcoin a Good Investment if You’re Close to Retiring?
With how rapidly Bitcoin moves, it’s a good section of your retirement strategy, but it should not be the focal point. The bigger they are, the harder they fall, which we’ve seen with the housing market, stock market, and plenty of other financial sectors in the United States.
Financial experts are aware of the gain of Bitcoin and cryptocurrency in the long-term, so they’re not opposed to it, but any halfway-decent financial advisor will tell you that you should never put all your eggs in one basket when it comes to investing.
If it’s taken a long time for you to gain enough wealth to actually begin investing, and you’re already nearing retirement, Bitcoin does pose the highest return in the shortest amount of time possible.
But as scarcity continues and its popularity rises, the costs are only going to rise with it.
Can You Retire From Bitcoin Right Now?
That depends on when you bought it, or how much you have to buy it right now. Bitcoin has come a long way from being less than a dollar a piece, so getting in on the action is obviously more costly now.
If you buy Bitcoin today and it continues to climb, and then you sell, you can live off of that money. You can invest it in REITs, bonds, stocks, more cryptocurrency, or anything you want.
If you cash out properly, you could even retire with a lump sum right now and just live off of it.
But let’s be realistic, because it’s not 2011 anymore: Bitcoin has come a long way, and it’s now posed as a better long-term investment than a short-term asset.
To retire from Bitcoin right now, you would need to hold enough that you could live off of the average 6% annual dividend yield (depending on what IRA firm you’re going with).
Again, there’s no guarantee that there won’t be a bubble in the future, so if the goal is to live off of Bitcoin dividend yield from your IRA account, you need to think about how you can reinvest that money to diversify your portfolio.
Should You Invest in Bitcoin?
Bitcoin is a good investment as it stands right now, but it is not bulletproof, and it’s completely susceptible to financial ruin (as any investment is). It should be included in your portfolio for retirement, but it should not be the focus.
There are tons of people who own Bitcoin who don’t even know how it works, and that’s the beauty of it: you can get in on the ground floor without having to know a million complicated terms, sale techniques, and market capitalization rules.
That’s what makes it great for everyone, but also volatile. Follow the 80-20 rule with investing, and even if it’s in a Bitcoin IRA, you should still consider it high-risk enough to be included in the 20% of that rule.
Bitcoin for Retirees FAQ's
Yes, you can. With many firms and platforms, you need a minimum (meaning you do not have to rollover your entire 401(k), and you can begin a cryptocurrency IRA today.
The only caveat is that you can’t exactly access the crypto, so if there’s a massive spike in the market, you can’t just sell before the price goes down.
Because of IRS regulations, cryptocurrency in an IRA must be stored and be accessible solely to a verified third party, being a depository. There are cryptocurrency depositories that offer cold storage for Bitcoin, so you can safely and secure use cryptocurrency to fund your retirement.
It is relatively safe. Bitcoin is about as safe as any stock investment, except with a historically larger payoff. As the world goes digital in every way we can imagine (when’s the last time you’ve even seen a newspaper?), currency is headed that way.
The cryptocurrency boom is still happening, and Bitcoin is the king. It’s safe in the sense that it always bounces back and goes higher, but eventually, as with any investment risk, there will be a bubble.
Fortunately, since Bitcoin has a limited quantity and it can’t just split coins the way that companies can split stocks, scarcity will control its price.
Trading Bitcoin is an engaged process, so you have to have knowledge of the market, and the means to sell if the goes gets good.
Even then, many Bitcoin enthusiasts purchase Bitcoin to hold onto it with no intent of selling. I mean, historically, we’ve all seen how well it’s done.
Retirees should hold onto Bitcoin for the foreseeable future. One of the most interest things about Bitcoin is that it should last well into 2040 and beyond with the way that mining works, so even if you’re eighteen years old and looking to build your retirement plan starting now, Bitcoin is still going to be around.
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