Every asset class carries its own set of advantages. The key to achieving your financial objectives and growing your wealth is understanding those advantages, and learning to balance your investments across a range of appropriate asset classes suited to your unique situation.
Digital currencies are an entirely new asset class. And they offer a combination of benefits previously inaccessible under the umbrella of a single investment.
Even better, new Digital IRAs (a type of self-directed IRA account) now allow Americans to leverage digital currencies as an IRS-approved retirement investment – adding a whole new dimension of benefits.
No longer do you need to settle for the same selection of investments that are offered through most conventional IRAs and 401(k)s – such as stocks, bonds and mutual funds. Instead, with a Digital IRA, you can truly diversify your retirement savings beyond traditional assets and gain exposure to the enormous growth potential of digital currencies.
Here are the primary advantages that digital currencies have to offer, plus the unique benefits of holding them inside a Digital IRA.
Per Notice 2014-21 from the Internal Revenue Service, digital currencies are treated as personal property for tax purposes, thus making them eligible to be held inside a Digital IRA account. That means that any gains you accrue through your digital currency investments remain tax-free until you withdraw them from your retirement account as a distribution.
And here’s something else that many people don’t know: If you sell your digital currencies within your IRA without taking a distribution, any gains that you may have made can be reinvested in other asset classes. In other words, your IRA does not need to remain entirely in digital assets to keep this tax-deferred designation.
When you buy Bitcoin inside your account and sell them later for a profit, you can reinvest your capital into any IRA-approved asset (such as stocks, bonds, mutual funds, ETFs, precious metals, private equity, certain types of real estate, and more) while still enjoying full tax-deferred benefits.
Unlike fiat currencies or “paper money,” digital currencies possess two built-in mechanisms to guard against inflation.
1) Decentralized Management
There are no controlling entities with power over digital currencies. Try as they might, governments and central banks can never interfere in digital currency markets. All digital currency assets are managed and maintained solely by their large decentralized network of users, making devaluation and debasement virtually impossible.
2) Adaptive Scaling
The supply of all digital currencies is governed by something called “adaptive scaling.” Essentially, this means that new digital currency becomes more difficult to “mine” as the currency supply grows. Some digital currencies (such as Bitcoin) even have a hard cap on how many units can ever exist.
Because of the scarcity and decentralized management inherent in all digital currencies, they can serve as a valuable inflationary hedge for your savings.
Industry Disruption: Long-Term Upside
The most profitable investments are often tied to industry-disrupting technology. Today, digital currencies are being proven as the latest demonstration of that timeless maxim.
The Blockchain technology powering all digital currencies is poised to make massive and permanent changes to our conventional monetary system. And that’s why many leading analysts believe most digital currencies are currently underpriced by a significant margin.
Just as the Internet revolutionized communication, digital currencies are revolutionizing the financial system. And the opportunity for Americans to use this disruption to their advantage will never be riper.
Holding a wide variety of assets is a crucial step for minimizing risk and maximizing profitability. Failing to diversify your savings appropriately can quickly lead to unnecessary losses and missed profits. Sadly, this happens quite frequently with most conventional IRAs and 401(k)s, which offer a limited selection of assets – usually no more than stocks, bonds and mutual funds.
Because of their unique characteristics and unconventional benefits, digital currency assets offer a valuable diversification option that all investors should consider.
Private & Secure
Digital currencies operate on a cryptographic protocol that allows you to stay completely private and anonymous. Without your consent, no individual or organization can trace your personal identity to the digital currency investments you hold.
Furthermore, all storage and transference is guarded with advanced multi-level encryption – making digital currencies one of the most secure assets available today.
Fast & Unrestricted
Banks, governments, and regulatory institutions have no ability to interfere with the flow of digital currency markets. As a result, digital currencies can be transferred over any distance, at nearly instantaneous speed, and with minuscule transaction costs, regardless of transaction size.
Never before has this broad range of benefits been available through one asset alone.
That said, informed investors currently have the rare chance to leverage digital currencies at a unique period in their development – at a time when the market has already validated them as a valuable new asset class, but long before their full potential is realized.
If you’re ready to open up your retirement savings to the growth potential of digital currencies, or if you have any questions, get in touch with BitIRA today. Your personal Digital Currency Specialist will gladly explain the process and offer support to guide your next steps.