Bitcoin in Your Retirement Account
A seismic shift happened this week. No, I’m not talking about a certain mercurial billionaire and his social media acquisition. The future changed for Twitter, but it also changed for millions of American workers.
Make sure you don’t miss this one.
Fidelity announced plans to offer Bitcoin to 401(k) customers in the US, and will do so by the middle of this year. The company is the largest provider of 401(k) in the country and services more than 20 million customers.
It’s a huge development.
Bitcoin has been offered in various private IRAs for a long time. Plenty of people saving for retirement have been able to contribute via this fund or that one. Using Bitcoin as a long-term investment is nothing new.
But offering it as part of employment based retirement plans is a novel idea.
Consider this—employees contribute pre-tax dollars to their 401(k) plans. For many, these accounts represent the largest pile of money they have to ensure that their later years are secure. Employers tend to match percentages of money contributed. So much hinges on the performance of a 401 (k).
Now many will be able to add a Bitcoin position into the mix alongside their bonds, stocks, international investments, and cash.
There are a some caveats. Fidelity will only offer Bitcoin if the employer opts into it. Contributions will be placed in digital asset accounts, and employers will be able to set limits on how much employees can contribute. Employees won’t be able to make lots of quick switches in and out of the Bitcoin plans, and there will be trading fees.
Still—this is big.
In my opinion, this helps people see Bitcoin as a long-term position, something that most ardent Bitcoiners believe. Conversation about this particular asset tends to take a long view, with people using past charts and historic price movements to indicate where the asset price might be in ten, fifteen, or twenty years. Investing for retirement means having a similar mindset. This is money that won’t be touched for years, and that informs the risk assessment.
To be clear, investment in Bitcoin has plenty of risk, no matter how you’re looking at it.
But it also has huge upside.
Now millions of people will be able to see how Bitcoin performs in their portfolios. And why not toss a percentage at it? That can be a smart idea, as long as the rest of the investment is balanced and the investor understands the underlying position. Bitcoin provided massive gains over the last decade.
Why not find out where it goes next?
Plus…
The Crypto Connection is for entertainment purposes only and is not meant to be financial advice. Please do your own research before investing in any asset class. Sara Celi is not a financial advisor, and holds several cryptocurrencies. To purchase her books on Amazon, please click here.