Crypto Retirement Revolution
Despite the abundance of financial resources available on the web many still face the question of which financial asset to invest their money in and whether saving money for retirement in banks is really worth it. The truth of the matter is that Crypto and Retirement go hand and hand.
This era has certainly witnessed a dip in the value of saving with banks with double-digit interest rates a thing of the past.
Regular savings accounts offer nearly zero interest, while “high yield” savings accounts offered by banks typically yield less than even 1%. This has resulted in less money stashed in savings due to the multiple options offered by cryptocurrencies. Don’t get us started about mutual funds and their incredibly high fees and underperformance.
Investors no longer need to be tied to the old stocks and bonds mentality. The future is here now. Cryptocurrency is a revolutionary concept derived from blockchain technology. Cryptocurrencies / Digital Assets are virtual currencies built using blockchain technology and have become popular in recent years due to their immense investment value.
Cryptocurrencies Outperforming other Financial Assets
Leading the charge is the oldest and most popular cryptocurrency Bitcoin (BTC), alongside leading altcoin Ethereum (ETH). Bitcoin has within the space of a decade risen from being worth pennies to several thousands of dollars.
Despite its volatile nature that has seen some lose money, it represents an excellent opportunity for those looking to get good investment for their hard-earned cash. To get a perfect picture of how bitcoin has grown into a significant investment asset, we look at its recent financial history.
The value of bitcoin increased from $431 in January 2015 to $30,000 in January 2021, representing a growth of 6674%. An investor that bought $100 worth of Bitcoin in 2015 would have seen his portfolio rise to $6,667 in five years.
During this five-year period, the average annual yield earning on government bonds and stock dividends was 2.20% and 2.70%, respectively.
Offering a Hedge against Inflation
The coronavirus pandemic that struck the world in late 2019 and 2020 resulted in a significant economic downturn globally.
Governments resorted to printing unprecedented amounts of fiat currencies to bolster their economies. The U.S, in particular, printed the largest economic bailout in its history, offering trillions of dollars in stimulus checks.
The printing did not do much for the American economy and the U.S recorded its lowest ever levels in the dollar’s purchasing power in August 2020. Bitcoin, in contrast, had one of its best years in 2020, with the coin moving from $3400 in March to over $28,000.
Bitcoin’s ability to retain or increase in value during economic or natural crises has led to the media labeling it digital gold. One of the reasons for bitcoin’s ability to retain value at any given time is that it beyond any government control and has a limit on the number of tokens that will be minted.
Bitcoin also offers a novel system that ensures financial inclusion where anyone can take part, unlike the complex systems of traditional finance. This makes it popular among investors looking to save their money against inflation.
An Alternative to Traditional Finance
One of the great things about cryptocurrencies is the extensive ecosystem it represents. They represent alternative asset investing on steroids. Some of the traditional financial system problems include difficulty accessing financial services like loans, compound interests, and other investment tools.
Cryptocurrencies have revolutionized finance by offering financial products within a decentralized system. Ethereum, the leading smart contract network, is the driving force behind this new concept called decentralized finance (DeFi).
DeFi platforms offer easy access to financial tools like loans and offer anyone the opportunity to lend their money for impressive interests. Also, new financial products like staking and yield farming have enjoyed massive popularity among investors.
Investors can easily lock their assets within a DeFi platform and reap compound interests for their investments. Another unique aspect is liquidity farming, where investors add liquidity on exchanges in return for interest payments.
Investing in cryptocurrencies like bitcoin and Ethereum is great for long-term investors looking to have a good return for their money. Nevertheless, there are still some things to consider, including potential regulations limiting cryptocurrencies and rising taxes for crypto-holdings globally.
Crypto Retirement Accounts
Investors now have the ability to invest in crypto through their individual retirement accounts (IRA’s), which provides tremendous tax advantages for those who have a long term mindset. All trades made within their Crypto IRA are tax-free, which means investors don’t need to stress about short term / long term capital gains each time they make a trade. This can do wonders for compounding returns over time, because taxes often eat into the bottom line of investments by as much as 50%. It’s time to start taking your retirement investments and retirement planning seriously, there may be no better than than now to ensure that future includes Bitcoin.
If you want to learn more about Crypto IRA’s, request our Free Crypto IRA Investor guide now.