Is Cryptocurrency a Good Retirement Investment? – 2024 Guide

As the popularity of digital money is on the rise, it is not surprising to be familiar with names like Dogecoin, Ethereum, Litecoin, Bitcoin, and XRP. There was a time when people were even skeptical about risking their money in the financial market, but cryptocurrencies have changed the scenario completely. It has lured people so much they are ready to invest thousands of dollars in this market in the hope of making profits somewhere in the future.

Digital currency can be exchanged and used as actual money in places accepting it legal tender. It is usually exchanged virtually between people without the involvement of a broker, like a bank or the Government. It can be termed as the wild west of the online world – unfortunately, there’s no marshal to oversee the law. Thus, it is decentralized with no Government or financial institution controlling its value, manufacturing, and exchange procedure.

Even though there are various disadvantages of using this currency, people worldwide still see it as a good way of investment. In today’s scenario, digital money is gaining speed and becoming widely accepted as a legal tender. Major retailers including Expedia, Etsy, PayPal, Starbucks, Dominos, Nordstrom, and Whole Foods are now letting people make payments with crypto.

People nowadays are funding crypto to obtain more returns and add diversity to their retirement portfolios. So, if you wish to save money for retirement in a Crypto IRA, please know that it is a highly unstable and risky currency. Let’s learn a few essential things to know about Crypto IRA:

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What is Meant by a Bitcoin IRA?


Also known as a self-directed IRA, Crypto IRA is a retirement account that allows users to fund alternative assets. These assets include real estate, virtual currency, and precious metals generally not counted under traditional IRAs. It lets you buy alternative assets besides the ones mentioned above.

If you’re considering investing in crypto for retirement, it is an excellent plan because it is a golden opportunity to multiply your returns and obtain variety. Although it puts your retirement portfolio at stake, there are several other advantages to learning.

Bitcoin IRA runs similarly to the usual IRA, except that your money is not put in mutual fund shares but cryptocurrency. Here, you have the liberty of risking your cash in either traditional or Roth self-directed IRAs and enjoy the tax perks concerning each.

Advantages of Investing Your Cash in Bitcoin IRAs:

Diversification of Currency


The financial market has been around for a very long time. Maybe it is the main reason why people trust financial assets and have them in their retirement accounts. It helps them secure their retirement money, even though crypto is a risky market and currency.

Potential of Higher Return

We all know that crypto is a highly volatile currency. Its value fluctuates a lot even within a day, making it difficult to make predictions. But it comes with the potential of huge gains as well. Experienced people in this market believe that its potential is worth taking the risk, especially if you’re risking a low percentage of the total IRA amount.

Earning Tax Advantages


Using digital money carries a lot of perks, one of them being the major tax benefits. If you’ve ever invested in online currency, you must know that recording transactions and calculating taxes owed gives a headache. It happens because every time you sell crypto again, you are in debt, and it is a curse for bookkeepers as it is tough remaining updated to buying amounts and profits.

Fortunately, putting your money in a conventional or Roth IRA offers tax perks and alleviates the load as you don’t have to pay taxes on anything as long as the cash and securities stay in your account. You will also benefit from the increasing value of the money that you’re not paying as taxes.

Diversifying Risks

By adding cryptocurrencies to your retirement portfolio, you don’t just expose yourself to a potentially high-reward investment; you also spread the risk. Holding them in a safe wallet such as Safepal is nice, but investing into your retirement fund can be a wise decision too. When stock markets falter, for instance, cryptocurrencies might act as a counterbalance. An example of this was in 2020 when some investors turned to Bitcoin amidst the global economic downturn, believing it to be a safe haven.

Potential for Decentralization

The inherent nature of cryptocurrencies, decentralized and free from any central authority, offers a fresh perspective for investors.The 2008 financial crisis served as a wake-up call for many, questioning the reliability of traditional financial systems. Cryptocurrencies, born from the same era, offer an alternative, decentralized control which some view as a more transparent and trust-worthy system.

No Boundaries

Whether you’re in Tokyo or Toronto, cryptocurrencies offer the same opportunities. This universal nature makes them an attractive asset, eliminating the geographical limitations that often come with other investments. Emerging markets, especially, can benefit from this, giving residents an avenue to invest without heavily relying on their local economy.

Disadvantages of Investing Your Money in Bitcoin IRAs:

Involvement of Fees


In traditional IRAs, there is no transaction fee involved. But in self-directed Bitcoin IRAs, the fee involved is high. You must pay multiple times, first during the set-up stage and then for trading and management. That’s why we advise you to educate yourself beforehand relating to the fees relating to investing in digital currency for retirement.

Curbs on Exchange

Most Bitcoin IRAs don’t allow users to trade on affiliated currency exchanges. It is bad news for people who like choosing an exchange by themselves. So, we advise you to educate yourself regarding whether the Crypto IRA company permits choosing to trade on your own before you retire.

Highly Volatile Type


If you’re about to retire, it will be best to reconsider investing in crypto as it is a highly volatile currency, which is not suited for an IRA. Read more to educate yourself about digital money and take advantage of the price volatility of crypto assets to enjoy daily profits.

Losses on Capital

Unlike the taxable investment accounts where risks are hapless but not without perks, it is not possible with Crypto IRA due to its tax-advantaged reputation. In a regular account, you can reduce the losses or use them to balance profits with other investments via tax-loss harvesting. But it is not possible with the IRA.

Layer of Complexity


While funding in Bitcoin IRA, you are required to have at least one more retirement account besides maintaining the fluctuating parts of exchanges, safekeeping, and custodians. It is due to the reason that Cyroto IRAs cannot accommodate items such as bonds, stocks, and mutual funds. So, if you’re wondering whether bitcoin is the best retirement investment, know that it might add complexity to it.

Final Words

Although there are many upsides and downsides of putting your money in Bitcoin IRA, we can say that this full-service trading and investing platform is the best option for your digital money needs. As no investment is ever a certain thing, you can earn a lot of money if you invest wisely in crypto.