WHY INVEST
The 5 Reasons Why the Most Successful Investors in Alternative Assets are Turning to Cryptocurrency
The truth about cryptocurrency is that it is a highly unusual asset class. It’s innovative. It’s fast-paced. And it has taken the place of the traditionally “preferred” alternative asset classes for many self-directed investors.
The question is WHY.
If you are new to the digital currency scene, you might be wondering what could be attracting seasoned, savvy investor capital away from the tried-and-true asset classes like real estate, syndications, and private loans. Sure, there are many other alternative asset classes (you can learn all about them in our guide), but those three tend to be the gold standard for self-directed investors thanks to high predictability and yields.
Yet, we see more and more self-directed investors moving into the cryptocurrency market every day, generating incredible returns and positioning themselves for long-range achievements.
What is going on?
The TaxFreeCrypto.com team looked at the data to see if we could determine what was leading investors who traditionally have relied heavily (and often exclusively) on predictable, high-return assets into cryptocurrency. We identified 5 reasons the most successful investors in alternative assets are turning to cryptocurrency:
1. Cryptocurrency IRAs can be protected like no other vehicle.
One of the reasons that many self-directed investors were initially slow to move into the cryptocurrency markets despite the potential for huge growth was that they were intensely concerned about the safety of their assets. Thanks to security measures like those that the TaxFreeCrypto.com team’s preferred providers are willing to take (like protecting vulnerable digital assets in military-grade, cold storage with “Grade 5” nuclear-bunker level security), the nightmare of having millions or even billions of dollars in digital currency irrevocably stolen is nearly impossible in reality. Our partners work with the most advanced crypto- and cybersecurity provider on the planet to provide your crypto investments with the physical and digital protection appropriate for such a high-value asset.
2. Diversification is more important today than ever before.
In a self-directed IRA, you have the ability to invest in nearly limitless asset categories. Savvy investors know that often the biggest gains come from early adoption of new technology, but it can be hard to get in on the ground floor (or even the lower levels) of tech advances – and unicorns are expensive to fund and difficult to identify.
With cryptocurrency investments in your self-directed IRA, you can leverage the benefits of getting in early on a promising new asset class while insulating high-level returns from the massive capital gains taxes the government insists are appropriate for successful crypto investors.
3. A self-directed account provides a layer of protection from unpredictable public policy shifts.
Investors hate to admit this, but the hard truth about today’s markets is that public policy is changing the rules faster and more frequently than ever before when it comes to how assets and asset vehicles work. There is probably no better way to insulate your portfolio from wild shifts in how assets are taxed than to remove the tax component from the issue completely.
After all, as we well know, if there is an institution that does not move quickly, it is the IRS. While the federal tax agency can be notoriously difficult and has an awful reputation among many of the country’s wealthiest people, it is all about rules (something the country’s wealthiest definitely understand, as should you). In a time when the rest of the financial markets seem to be veering as far and fast away from the laws of economics as possible, investing in a relatively new asset from the advantageous point of a self-directed account is too appealing for most successful investors to pass up.
4. Flexible, custom tax benefits are irresistible.
In 2019, the IRS sent tens of thousands of warning letters to cryptocurrency holders that warned those investors they might have “improperly paid” their taxes on their crypto assets. While this sounds like those investors might be in for refunds, the truth of the matter was that the IRS had decided the time had come to cash in on the huge yields that cryptocurrency investors were generating by investing in this innovative new asset. IRS commissioner at that time Chuck Rettig even issued a formal, verbal warning:
“The IRS is expanding our efforts involving digital currency, including increased use of data analytics.”
For successful self-directed investors, this meant the time had come to move cryptocurrency activities into the highly advantageous structures of self-directed accounts. As a self-directed investor, you will be able to choose between generating truly tax-free returns using a Roth IRA that permits returns to grow and be withdrawn tax-free (if rules are followed) or a traditional IRA, which requires withdrawals to be taxed but retains the tax-free status of returns as long as they remain the account. Both options are irresistible for investors planning for a long and active retirement, and the most successful self-directed investors quickly added cryptocurrency to their self-directed strategies in the years following the IRS warning.
5. IRAs are not subject to capital gains taxes.
Short- and long-term investment gains are subject to capital gains taxes, and cryptocurrency is no exception. When it comes to public policy, middle-class earners diligently saving for retirement fall into the category of “the ultra-rich” and are taxed accordingly, with capital gains rates exceeding 37% of all your returns. Successful self-directed investors who have been using self-directed IRAs to protect their returns in real estate, private lending, and syndications can no longer resist the potential to protect crypto returns in this type of account also.
No Surprise that Self-Directed Investors Want Emerging Assets in Specialized Accounts
Of course, cryptocurrency is still an emerging asset, which is one of the biggest attractions it holds for traditionally risk-averse investors content to generate large returns in alternative assets. It comes as no surprise, then, that the appeal of placing such an asset in an account complete with specialized services dedicated to the protection of digital currency and a state-of-the-art platform for investing would be intensely appealing to the most successful self-directed investors today.
WHY INVEST
The 5 Reasons Why the Most Successful Investors in Alternative Assets are Turning to Cryptocurrency
The truth about cryptocurrency is that it is a highly unusual asset class. It’s innovative. It’s fast-paced. And it has taken the place of the traditionally “preferred” alternative asset classes for many self-directed investors.
The question is WHY.
If you are new to the digital currency scene, you might be wondering what could be attracting seasoned, savvy investor capital away from the tried-and-true asset classes like real estate, syndications, and private loans. Sure, there are many other alternative asset classes (you can learn all about them in our guide), but those three tend to be the gold standard for self-directed investors thanks to high predictability and yields.
Yet, we see more and more self-directed investors moving into the cryptocurrency market every day, generating incredible returns and positioning themselves for long-range achievements.
What is going on?
The TaxFreeCrypto.com team looked at the data to see if we could determine what was leading investors who traditionally have relied heavily (and often exclusively) on predictable, high-return assets into cryptocurrency. We identified 5 reasons the most successful investors in alternative assets are turning to cryptocurrency:
1. Cryptocurrency IRAs can be protected like no other vehicle.
One of the reasons that many self-directed investors were initially slow to move into the cryptocurrency markets despite the potential for huge growth was that they were intensely concerned about the safety of their assets. Thanks to security measures like those that the TaxFreeCrypto.com team’s preferred providers are willing to take (like protecting vulnerable digital assets in military-grade, cold storage with “Grade 5” nuclear-bunker level security), the nightmare of having millions or even billions of dollars in digital currency irrevocably stolen is nearly impossible in reality. Our partners work with the most advanced crypto- and cybersecurity provider on the planet to provide your crypto investments with the physical and digital protection appropriate for such a high-value asset.
2. Diversification is more important today than ever before.
In a self-directed IRA, you have the ability to invest in nearly limitless asset categories. Savvy investors know that often the biggest gains come from early adoption of new technology, but it can be hard to get in on the ground floor (or even the lower levels) of tech advances – and unicorns are expensive to fund and difficult to identify.
With cryptocurrency investments in your self-directed IRA, you can leverage the benefits of getting in early on a promising new asset class while insulating high-level returns from the massive capital gains taxes the government insists are appropriate for successful crypto investors.
3. A self-directed account provides a layer of protection from unpredictable public policy shifts.
Investors hate to admit this, but the hard truth about today’s markets is that public policy is changing the rules faster and more frequently than ever before when it comes to how assets and asset vehicles work. There is probably no better way to insulate your portfolio from wild shifts in how assets are taxed than to remove the tax component from the issue completely.
After all, as we well know, if there is an institution that does not move quickly, it is the IRS. While the federal tax agency can be notoriously difficult and has an awful reputation among many of the country’s wealthiest people, it is all about rules (something the country’s wealthiest definitely understand, as should you). In a time when the rest of the financial markets seem to be veering as far and fast away from the laws of economics as possible, investing in a relatively new asset from the advantageous point of a self-directed account is too appealing for most successful investors to pass up.
4. Flexible, custom tax benefits are irresistible.
In 2019, the IRS sent tens of thousands of warning letters to cryptocurrency holders that warned those investors they might have “improperly paid” their taxes on their crypto assets. While this sounds like those investors might be in for refunds, the truth of the matter was that the IRS had decided the time had come to cash in on the huge yields that cryptocurrency investors were generating by investing in this innovative new asset. IRS commissioner at that time Chuck Rettig even issued a formal, verbal warning:
“The IRS is expanding our efforts involving digital currency, including increased use of data analytics.”
For successful self-directed investors, this meant the time had come to move cryptocurrency activities into the highly advantageous structures of self-directed accounts. As a self-directed investor, you will be able to choose between generating truly tax-free returns using a Roth IRA that permits returns to grow and be withdrawn tax-free (if rules are followed) or a traditional IRA, which requires withdrawals to be taxed but retains the tax-free status of returns as long as they remain the account. Both options are irresistible for investors planning for a long and active retirement, and the most successful self-directed investors quickly added cryptocurrency to their self-directed strategies in the years following the IRS warning.
5. IRAs are not subject to capital gains taxes.
Short- and long-term investment gains are subject to capital gains taxes, and cryptocurrency is no exception. When it comes to public policy, middle-class earners diligently saving for retirement fall into the category of “the ultra-rich” and are taxed accordingly, with capital gains rates exceeding 37% of all your returns. Successful self-directed investors who have been using self-directed IRAs to protect their returns in real estate, private lending, and syndications can no longer resist the potential to protect crypto returns in this type of account also.
No Surprise that Self-Directed Investors Want Emerging Assets in Specialized Accounts
Of course, cryptocurrency is still an emerging asset, which is one of the biggest attractions it holds for traditionally risk-averse investors content to generate large returns in alternative assets. It comes as no surprise, then, that the appeal of placing such an asset in an account complete with specialized services dedicated to the protection of digital currency and a state-of-the-art platform for investing would be intensely appealing to the most successful self-directed investors today.
Curious about how it all works and how to avoid the same pitfalls that the most successful self-directed investors are avoiding using these powerful account structures? Sign up to receive our exclusive, free guide full of the latest information on how to best manage your digital currency investments and protect your assets. No one else offers this type of insight and education on this topic. Get yours today!
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