Smart Strategy: Investing in Crypto Using Your IRA

While many people still use traditional brokered IRAs for their retirement savings, some have been turning toward the opportunities that alternative investments allow.

Traditional IRAs are often used for stocks, bonds, and mutual funds. But self-directed IRAs can be used for alternative investments such as cryptocurrency and real estate. With a self-directed IRA, you can diversify your investment portfolio and open up the possibility of higher returns.

The Rise of Alternative Investments

As the investment industry grows and changes, it offers new and different opportunities. In the past, people could only invest in stocks, bonds, and cash. Today, there are a multitude of new options. These new options are all grouped under the term alternative investments. They offer valuable ways to diversify your investments and increase your rewards in the long run.

Alternative investments include real estate and commodities like gold, as well as cryptocurrency. These investments are often managed actively, with the individual investor or a financial advisor monitoring and controlling their investments and defining their overall strategy. For those who enjoy learning about new investments and exploring opportunities in the financial sector, this can mean a chance to earn significant profits from their learnings.

With the development of platforms that allow for alternative investments in your IRA, it is easier to invest in these assets than ever before. Investing with your IRA means you can invest while saving for retirement and even get significant tax benefits.

IRA Basics

An IRA is a special investment account you can use to grow your retirement savings. IRAs have tax advantages, such as additional investment incentives, lower taxes on distributions, and delayed Social Security eligibility.

In addition to choosing between a traditional or self-directed IRA, you can choose between a Roth IRA and traditional IRA — two types of IRAs offered by the IRS. In a Roth IRA, you pay tax on your money when you contribute it, allowing your money to grow tax-free. Whereas, in a traditional IRA, you don’t pay taxes until you withdraw money from your IRA.

How Does Investing in Crypto Using An IRA Work?

While some have shied away from cryptocurrency due to its technical complexity and newness as an investment, it shows immense promise, especially in the long term. In recent years, interest and investment in crypto have grown enough that several companies now offer the option to invest in crypto using your IRA.

“Despite the recent ups and downs of the market, we know that crypto is a long-term play and that it has a lot of potential for growth in the future,” said Kevin Maloney, CSO and interim CEO of iTrustCapital.

iTrustCapital is one of the platforms that allow users to buy and sell crypto within their IRAs. The platform is built for both beginner users and experienced investors. It will walk them through the process of creating an account, selecting their IRA type, funding their account, investing, and using their dashboard. The platform also offers educational materials to help users learn about IRAs, investing, and cryptocurrency.

Although the world of crypto investing may seem daunting at first glance, modern investment platforms like iTrustCapital have made the process simple. As part of their mission to help more people reap the benefits of crypto, iTrustCapital has a wide variety of resources, including a client support team, community engagement on their site, and social media platform presence.

Benefits and Barriers

Like all kinds of investments, cryptocurrency IRA investments have their advantages and disadvantages. Unlike stocks and bonds, which are liquid by nature, real estate and cryptocurrency investments may be more difficult to cash out in a pinch if you need to withdraw from your IRA.

Also, investing in crypto using an IRA means taking on an additional level of risk compared to traditional stocks and bonds.

Successfully investing in cryptocurrency requires experience, decisiveness, and a willingness to learn. When you invest in stocks and bonds through your IRA, you can rely on the expertise of the fund managers to some extent.

However, when you invest in crypto, you’re responsible for making all of the investment decisions. Platforms like iTrust have an immense amount of learning resources and support available, meaning if you choose, you can learn your way around this investment space.

If you do take the time to familiarize yourself with cryptocurrency investment strategies, you can reap some pretty significant benefits. Cryptocurrency investments have lower capital gains taxes than conventional stocks and bonds, so you’ll be able to gain an even greater tax benefit than a traditional IRA investment.

In addition, the risk of cryptocurrency investment also means it can be one of the most lucrative investment opportunities in the space.

Integrating Crypto Into The Financial System

Since the inception of cryptocurrency, many have been working to make it appealing and accessible to the wider public. The ability to invest in crypto using an IRA is a major milestone in the path toward the mass adoption of cryptocurrency. It shows how blockchain technology has already begun to permeate the financial system, opening up the question of what other financial sectors crypto may expand into.

People’s willingness to invest their retirement savings in cryptocurrency also makes a significant statement about the safety of crypto as an investment. This is one of the top priorities for most strategic platforms, and they have put significant thought and effort into making this a safe and reliable investment for their customers.

For instance, iTrustCapital is determined to disprove the reputation of crypto companies as untrustworthy and volatile. They noted they never lend out their customers’ assets or use them for any other financial purposes; they are simply a platform that allows their users to invest in crypto with an IRA.

“We’re committed to doing our due diligence with our client's assets,” said Maloney. “Our priorities are ensuring that the assets we offer meet a certain set of criteria to maintain quality over quantity. These include a higher degree of security and liquidity, as well as relatively low volatility.”

Maloney also mentioned that despite the recent conditions in the crypto market, iTrustCapital saw its highest number of new accounts funded in July of 2022 on average since December 2021. This is an impressive show of trust, demonstrating that people are becoming more educated about cryptocurrency and how to use it as an investment in the long term.

Just as the growth of alternative investments has opened up new financial opportunities, the increasing prevalence of cryptocurrency is likely to do so as well. iTrust said while their priority is the security of their client's investments, they are also working to open up new offerings continually.

They recently introduced the ability to stake on their platform, becoming the first self-directed crypto IRA platform. They also said customers could look out for expanded product offerings like new types of investments and the ability to manage a more diverse portfolio on the platform in the future.