Imagine the potentially massive growth of cryptocurrencies without paying taxes on their growth. That can be what it’s like to have a cryptocurrency IRA or retirement account with alternative investments, including crypto coins. There are two main types of cryptocurrency IRAs, there are traditional IRAs and Roth IRAs. They offer different tax advantages, and understanding retirement strategies can help you make the most of them. These tips can help you plan your retirement account and establish a plan of action for your investments.
1. Start as Early as Possible
It’s never too early to start planning for retirement, according to Investopedia. Contributing to an IRA, even if it’s in small amounts, can be a great way to maximize your potential returns. This is because compounding investments can cause a snowball effect of increasing returns over long periods of time.
In the case of Bitcoin (BTC), it’s believed that anything can happen with its price due to its high volatility.. In fact, price predictions from crypto experts may have Bitcoin poised to potentially break $100,000 or higher. If these price predictions hold true, then there’s potential for high returns by investing in cryptocurrencies today.
2. Understand Your Options
Make sure you know what you’re getting into when it comes to investing says the U.S. Securities and Exchange Commission. You can consider researching to understand retirement platforms (like non-cryptocurrency IRAs and cryptocurrency-enabled IRAs), as well as the different investment options they allow you to make. You can also learn the differences between traditional and Roth IRAs, as they have different tax advantages.
Cryptocurrency IRAs on our platform enable investors to buy crowd favorites, such as Bitcoin (BTC), Cardano (ADA) and Dogecoin (DOGE). Of the popular coins, Bitcoin is the largest and most popular cryptocurrency, alongside Ethereum (ETH). In fact, Ethereum has been growing thanks to its powerful capabilities, which include enabling NFTs as well as its diverse array of applications.
3. Investment Strategies
According to Nerd Wallet, having an investment plan is important for investors whether they’re beginners or well-seasoned experts. Your investment strategy could be based on factors like your income, your risk tolerance and patience, your age, and your understanding of cryptocurrencies.
The most common investment strategy for those with retirement accounts is the long-term buy and hold strategy. This consists of investing in assets, like cryptocurrencies and not selling them for a period of time. These types of investors typically believe in the long-term potential of their assets, even if their assets have occasional drops in price.
Another strategy used by many is to trade cryptocurrencies more frequently. This allows investors to buy them when they’ve fallen, or when they appear to have consistent upward momentum, and profit from selling them when they go up.
4. Understand Crypto Volatility
While the long-term prospects for crypto remain in the minds of crypto researchers like Anthony Pompliano and even J.P. Morgan, cryptocurrencies are highly volatile and have a history of bear markets. There’s the potential for drastic price swings both up and down. However, if you understand how volatility affects Bitcoin and other cryptocurrencies like Ethereum and Litecoin, then you may be more likely to be able to withstand the bear markets to reap the rewards of the bull runs.
5. Keep More of Your Money
Investing in cryptocurrencies the traditional way through exchanges involves paying capital gains tax on any profits. That’s not to mention exchange fees and hidden charges getting in the way of your funds. Our platform was the first to help investors create cryptocurrency IRAs, which have major tax advantages. Long-term capital gains are taxed up to 20%, but you can grow your crypto retirement account tax-free1 with a Bitcoin Roth IRA.
6. Utilize IRA Earn
Our new offering, IRA Earn allows you to earn interest on your investment. It’s the first cryptocurrency retirement program to allow investors to earn interest on their assets. The program offers support for Bitcoin, Ethereum, and cash. The APY varies for each and is up to6%2, respectively. These interest rates are significantly higher than checking-savings account rates from traditional banks, which range from 0.02-0.05%.,Payouts are monthly and deposited within your IRA account. The more you invest in the program, the more you can earn.
Our platform is the easiest to use and our IRA specialists are the most helpful in the industry, we make crypto IRAs simple. If you’re interested in investing in cryptocurrencies with the tax advantages of a retirement account, then you can consider signing up for a Bitcoin IRA account.
1Some taxes may apply. We recommend you consult your tax, legal or investment advisor.
2Interest rates may vary.
Recommended article: Crypto IRAs: Traditional vs Roth IRA