Why is it even beneficial to invest in bitcoin?

The first thing any investment broker would tell to a potential customer asking about how risky is it to invest, will talk about the importance of diversification to minimize the risk of loosing everything.  Diversification is simply a strategy of allocating your assets among various financial instruments, industries and various categories for the hope that they would act differently when something happens. Asset correlation is a measure of how investments move in relation to one another and when. When assets move in the same direction at the same time, they are considered to be highly correlated. When one asset tends to move up when the another goes down, the two assets are considered to be negatively correlated which is the the goal of diversification. It is just a the fancy name for the advice: Don't put all of your eggs in one basket. This is the basic principle for asset allocation, a key element of portfolio diversification.  Most investment professionals agree that, although it does not guarantee against loss because there is still some percentage of correlation present practically in any asset, diversification is the most important component of reaching long-range financial goals while minimizing risk.

For example, a correlation of 50% between two stocks, means that in the past when the return on one stock was going up, then about 50% of the time the return on the other stock was going up, too. A correlation of -70% tells you that historically 70% of the time they were moving in opposite directions—one stock was going up and the other was going down." A correlation of 0 means that the returns of assets are completely uncorrelated. If two assets are considered to be non-correlated, the price movement of one asset has no effect on the price movement of the other asset. Non-correlation is extremely rare these days, and there are financial experts who work full time in the attempt to find the most efficiently non-correlated portfolio possible. For most of us, holding a combination of stocks, bonds and, perhaps some cash and real estate over the long term will do the trick. These assets all tend to perform in a less-than-correlated-way, and in combination can help dampen the overall volatility of a portfolio. 

One of the biggest benefits of investing in bitcoin is that it is a true non-correlated asset, which gives it a huge advantage over any portfolio your stock broker can ever come up with.  Therefore, the value of  bitcoin can’t be dragged down by economic forces that affect more traditional assets.  Moreover, bitcoin increases in value as more consumers and investors embrace it globally while  its growing value won’t be compromised by a bearish stock market, falling oil prices, or a weakening dollar. That is why it has brought wealth to so many people already and considered the best investment of our time!  The earlier one starts investing in bitcoin, the greater return he will be able to collect.  It is that simple.

Another huge benefit of the bitcoin is its in its anonymity and independence from being controlled by any government. This gives it a unique value that no other currency has, and that should prompt one to invest in Bitcoins since it points to further success. When you choose which product to invest in, you want to find out how unique it is, the niche that it occupies, and thus the likelihood that older customers will keep coming back and that newer ones will keep coming in.  Bitcoin gives the power of controlling the money flow back to the people.   

Happy bitcoin hunting everybody!

 

Switching your IRA Account to Bitcoin IRA.

One of the most beneficial way to invest in bitcoin is by using your IRA account.  When it comes to retirement planning, simply starting is often the hardest part. Learn how much you need to save and the best locations for your retirement dollars, including IRAs, Roth IRAs, and 401(k)s. And if you're dragging your feet on starting to save, learn why it's so crucial to start today.

Bitcoin IRA works pretty much like other types of IRAs. You fill out a form and you invest. You can invest in a traditional IRA (with pre-taxed assets) or a Roth IRA (with after-taxed assets) if you’re under 70 ½. Remember, you can’t take distributions in either type of IRA – a traditional or Roth – without a penalty unless you’re at least 59 ½. Generally, employees invested in their employer’s 401K are subject to the same penalty if they take distributions before they’re 59 ½.

Whether you have a 401K (through an employer) or an IRA, it would have to be explicitly self-directed for you to earmark it for bitcoin investment. Incidentally, this is also true of precious metals or collectible investments. In other words, as a plan participant, you get to choose the investment vehicle. Although this provision is changing in many 401K plans, most plans still specify a choice of only particular types of investments – usually stocks or stock funds.

Nobody can predict the future value of any investment. At this juncture, bitcoin is speculative. But given the rapidly increasing acceptance of bitcoin worldwide, its value can increase rapidly. Since its inception, we’ve already seen evidence of this. Under the circumstances, your IRA or 401K bitcoin investment could turn out extremely profitable over time – especially after you factor in your tax savings.

As with IRAs or 401Ks in precious metals or collectibles, a bitcoin IRA is handled through a custodian. Since bitcoin IRAs and 401Ks are a recent development in the financial community, only certain custodians will handle them.

A Bitcoin IRA works pretty much like other types of IRAs. You fill out a form and you invest. You can invest in a traditional IRA (with pre-taxed assets) or a Roth IRA (with after-taxed assets) if you’re under 70 ½. Remember, you can’t take distributions in either type of IRA – a traditional or Roth – without a penalty unless you’re at least 59 ½. Generally, employees invested in their employer’s 401K are subject to the same penalty if they take distributions before they’re 59 ½.

Whether you have a 401K (through an employer) or an IRA, it would have to be explicitly self-directed for you to earmark it for bitcoin investment. Incidentally, this is also true of precious metals or collectible investments. In other words, as a plan participant, you get to choose the investment vehicle. Although this provision is changing in many 401K plans, most plans still specify a choice of only particular types of investments – usually stocks or stock funds.

If you want to add Bitcoin to your retirement portfolio, the first order of business will be to find a custodian who will accept them, such as Regal Assets.

For federal tax purposes, the IRS mandates that qualified IRAs have a custodian to administer the account.

Here are the official Publications on this subject:

 IRS Publication 590 and IRS Virtual Currency Guidance.

 

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