Utilizing Bitcoin as a 401K / Roth IRA Retirement Style Investment
Most of the bitcoin community up until the last year or so with Venture Capitalists entering the market where young entrepreneurs and we have all heard the case for HODL ( a term for hold from the bitcointalk.org forums), but what really should be looking for with that?
Bottom UP, Investment Strategy
Is it possible to utilize Bitcoin as a retirement strategy even if my salary (or allowance) is low? No matter how much income you have a small amount in bitcoin on a monthly basis could become the secret of your future financial success. An investment of 1-3% of your monthly income could be utilized like a 401k or Roth IRA investment into your future. And by HODLing them until you are 55 or older or at minimum cashing out your yearly fiat investments with any gained bitcoin going to your long term hoard. We can't predict where Bitcoin is going ultimately end up in price but by increasing your amount of Bitcoin should be your end all goal.
For example
Let’s say you currently make $20,000 per year salary per taxes in the United States. By investing just 1% into a self-directed Bitcoin fund an investment of $200 per year ($16.67 per month) would go to buying bitcoins on a monthly basis. Why monthly? Because in this scenario you are trying to not time the markets and trying not to put yourself in a financial bind needing to front money, using 1% of your monthly income could be easily absorbed in most causes.
When to take back fiat investments
This setups up a yearly cost average of your Bitcoin, and say the $200 invested gets 0.5 BTC, this goes into a midterm wallet until you can “CASH” out for fiat or even purchases via a place like Overstock for goods when the BTC increases in value by a minimum of 5 – 10 times the average cost of the purchased Bitcoins. For example when Bitcoins hit $1,000 (USDBTC) sell 0.1 BTC to get back your initial $200, so no fiat is truly invested IF you need to utilize the fiat elsewhere. (*Remember possible capital gains must be paid depending on your location)
Why should we be worried about Retirement?
In a moneyunder30 article - How Much Should Be In Your 401(k) At 30? - the writer David Weliver suggest guidelines for 20-somethings on how to start saving early for retirement.
http://www.moneyunder30.com/how-much-in-401k-at-30
The most common 401K match is match is now $1 per $1 on the first 6% of employee deferrals per this Stephen Miller article meaning with a salary of $20,000 per year you are contributing 6% ($1,200) and getting that matched by your company for an investment of $2,400. In the United States this is Pre-Tax money that in not included in your yearly tax bills. Also note some companies have vesting options that require certain years of work otherwise that amount can decrease.
http://www.shrm.org/hrdisciplines/benefits/articles/pages/401k-match-contributions.aspx
So can you afford to contribute to a long term Bitcoin investment without touching it?
I would argue that how can you not invest in this manner as the goal is a Zero Dollar investment goal with long term understanding that Bitcoin can change how we transact in 20 years. Bitcoin might be your key to financial independence when it matters most, at retirement.
However you decide to invest into Bitcoins make sure you think about the future!