- 1 Non-Traditional Retirement Plan: First Steps
- 2 Gold and Silver IRA
- 3 Cryptocurrency IRA
- 4 Should you invest in an alternative?
Thinking about a retirement fund yet? Is it too confusing? Are you tired of hearing about stocks and bonds? Guess what; we found an alternative to a classic retirement plan and it’s becoming more and more popular. Interested? Have a look!
Gold, silver, and cryptocurrencies are the three non-traditional investment strategies that are alternative to the previous paper-based goods, such as stocks, bonds, and physical money. In case you wish to diversify your retirement plan by investing into any of the three options, you are definitely expanding the possibilities of income as well as securing your funds at the same time. Curious? Let’s begin!
Non-Traditional Retirement Plan: First Steps
Start here, if you wish to invest in a non-traditional retirement plan:
- Is the alternative IRS approved?
Before making any moves, make sure your alternative is IRS approved.
- Get a self-directed IRA
The traditional IRA allows you to invest, but only within the limits of the company that holds your account. Self-directed IRA (SDIRA) however, offers an option to invest into anything you want.
- Pick the right company
Since it’s your money, you want to make sure you trust the right company.
- Find a fee that you’re okay with
Find a company and a fee you’re okay with. Your best option would be a flat fee or flat rate.
Gold and Silver IRA
Gold and silver backed IRAs are becoming a more popular means to keep your retirements funds safe and even better, it is IRS approved. Instead of worrying about stocks, bonds and, sadly, inflation, focus on physical gold/silver coins and bullion instead and save some money by an alternative investment. Before investing, check what precious metals are IRS approved.
What is a Precious Metals IRA?
Gold or silver IRA is an individual retirement account, with physical gold, silver or any other approved precious metal as opposed to paper-based goods. These physical precious metals are stored for the benefit of the owner.
How can you include precious metals into your IRA?
In this case, there are two options:
- Physical gold and silver investment
Find a trustee, invest money or transfer the funds to your IRA. Before choosing a company, your number one strategy is to do due diligence by researching and looking at precious metals IRA reviews.
Once you choose a trustee, they purchase precious metals under your guidance. Then, keep you informed about the prices on the market.
- Indirect investment
Instead of physical metals, you can get an exchange-traded fund (ETF). Yes, you invest directly into physical gold, but only on paper. You actually own no gold and even though it is convenient.
What are pros of investing in precious metals?
- Diversity: diversify your investment funds and stabilize your funds
- Timeless value: in the long-term, gold holds its value all over the world
- Security: keep some physical assets that can be of help in case of natural disasters, economic or other crisis
- Global currency
- Growing demand
Call it digital gold, or money of the future, Bitcoin is everywhere. In Japan, they already accept bitcoins as a form of payment, and Amazon might do the same. The cryptocurrencies have been recognized by the IRS. Still in doubt? Read on.
What is cryptocurrency?
Simply put, cryptocurrency is digital or virtual money. It is both secure and, in most cases, anonymous. What’s more, cryptocurrencies are not controlled by any central authority, such as bank or government; they are decentralized and don’t exist in physical form, even though they can be traded for real cash. Some of the more popular include Ethereum, Litecoin, Monero, and Ripple.
How can you include cryptocurrency into your IRA?
Then, there are two options. In case you want to do it all yourself, you need to set up an LLC for IRS-compliance. The process itself may be a bit complicated for some, which is why a lot of people turn to the second option, looking for a reliable company, that helps people start their retirement fund by investing into bitcoins.
Where do you keep your bitcoins?
In a wallet: a multi-signature wallet (an application) with two or three different keys (digital signatures), which are private and stored separately.
There are different types of wallets:
- Centralized vs. decentralized wallets
Decentralized wallets are not owned by any individual or business. With these you are in full control of your keys. On the other hand, the centralized wallets are owned by a profit-oriented company. They have control over your wallet in a way: you trust them with your private keys.
- Hot vs. cold wallets
Hot wallets are those that connect to the Internet (downloadable software and smartphone apps). Cold wallets are not in contact with the Internet, such as USB-drives. They are the best and safest storage option for high long-term investment.
What are pros of using cryptocurrency?
- Safety: hacker-free and secure by various keys
- Diversity: diversify your investment funds
- High potentials for return: according to an article on Forbes, Bitcoin is said to grow even more in the next few years, reaching a potential $55,000
- Unlikely inflation: the supply of bitcoin is capped (there are only so many on the market)
- Independent from bonds, stocks or savings, which means that cryptocurrency does not lose value when other assets do, for instance in the case of an economic crisis
Should you invest in an alternative?
As established, the alternative forms of investment offer new possibilities where you can safely store your funds and diversify them at the same time. All of these non-traditional options have been gaining popularity in the media and among the users themselves.
Whether or not you do decide to invest, make sure to double-check that everything complies with the standards of the IRS and your own personal IRA. With a little luck and a bit of work, you may stop worrying about how to survive after you retire!
David Warren is the senior writer and lead researcher at HardStacks. He has been a financial engineer for over 30 years and has been investing in alternative assets since the Great Recession of 2008. He has a true passion for learning about economic cycles and educating others on how to protect and grow their wealth by investing in precious metals, real estate and cryptocurrencies.