One of the most important decisions you can make is how to provide for yourself and your family during your autumn years. In light of a recent recession that saw retirement pensions and personal retirement portfolios evaporate, it is important to not only save but to minimize your risk with your retirement savings. Taking the money out of the hands of the banks and putting it into bitcoin or altcoins is a way that has been suggested by some.

This article examines possible ways to inject bitcoin into your retirement savings, explores the potential dangers of doing so, and considers why it may be worth doing.

Knowing Your Level of Risk

First, remember that bitcoin and altcoins are extremely high-risk investments. What this means is that there is a chance for an annual return-on-investment that is measured in the thousands of percentage points, but there is also an equal or greater chance of losing money or significantly wiping out your bitcoin or altcoin portfolio.

As with all things bitcoin, there are differing opinions as to whether you should add bitcoin to your retirement portfolio. With price speculation being driven mostly by "fear of missing out," many argue that bitcoin should not be a part of any investment portfolio, let alone a retirement portfolio.

"Did I make myself clear? Bitcoin has no underlying rate of return," Vanguard founder Jack Bogle said. "You know bonds have an interest coupon, stocks have earnings and dividends. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it. Bitcoin may well go to $20,000, but that won't prove I'm wrong. When it gets back to $100, we'll talk."

If it was not for the speculation, you would still have to worry about the hacking. The December $70 million theft of bitcoin from NiceHash tends to remind investors that bitcoin investing is still the Wild West in regard to laws and the rules of order.

On the other hand, the less time you have to invest in your retirement account, the larger your contribution must be or the more risk you must take on. If you are in your twenties and donate a reasonable amount - such as ten percent pre-tax - to an interest-bearing account, you should be able to amass a reasonable retirement nest egg by age 65. However, if you are like most Americans and have yet to save in sufficient amounts for your retirement, you may need to be bold.

While bitcoin is volatile, it is not likely to fold without warning or to hit zero. Even with bitcoin losing nearly 70 percent of its value in 2013, bitcoin recovered remarkably. Bitcoin is somewhat of a bravery test; it is not going anywhere anytime soon, but like an angry bull, it will make you pay for wanting to hang on.

Comparing the Options

If you want to infuse bitcoin into your retirement plans, here is how you can go about doing it:

BitcoinIRA. Founded in 2016, the BitcoinIRA is exactly what it says; it allows investors the option to place bitcoin into a self-directed traditional or Roth IRA. Open to investors under 70 and a half years old, the BitcoinIRA offers the same tax benefits as a non-bitcoin IRA. The holding company, however, does charge a 15 percent upfront fee.
Grayscale's Bitcoin Investment Trust. Certain IRAs allow for the inclusion of shares from Grayscale's Bitcoin Investment Trust. An over-the-counter trust, GBIT is exclusively a basket investment of bitcoin, allowing investors to invest in the digital currency without having to worry about managing it. The trust charges a two percent annual management fee with no minimum investment requirements.
Holding bitcoin yourself. Perhaps the easiest way to add bitcoin to your retirement is to just buy bitcoin and store them. The idea is to put the bitcoin in cold storage - that is, place them in an offline wallet, such as a hardware or paper wallet. This would protect your coin from theft. This, of course, negates receiving any tax benefits that you may have if you invested in an IRA.

Regardless of what method you use, it is important that you understand all the risks involved. These do not just include current risks, but risks that emerge in the lifetime of the investment, including regulatory and technological changes, competition from other altcoins, and material risk in mishandling your wallet. It is advised that you only invest in bitcoin what you are comfortable losing.

Want to know about other opportunities for investing in New Finance? Read Bitcoin Market Journal and learn to invest like a pro!

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