How to use retirement funds to invest in Crypto: using 401K and IRA accounts


This is Dr Kidwell, physician, business owner and investor of 25 years
Do you want to use your 401K, IRA, or other retirement accounts to invest in crypto?

Consider Grayscale “The World’s Largest Digital Currency Asset Manager”
Or Proshares Bitcoin Strategy
Available in some retirement accounts. If neither are available, consider transferring your retirement to a different plan that allows investing with these types of funds

How big is Grayscale?
Grayscale holds $43 billion in crypto
Proshares Bitcoin is an ETF with just under $2 billion

Haven’t Grayscale assets dropped?
Yes, from $61 billion to 43 billion
Grayscale Bitcoin Trust and Ethereum Trust are 30 and 22 percent lower now than in Nov

Total Assets Under Management still 170% higher than 1 year ago

That means investors can buy Grayscale at a 22-30% discount in a fund that has still appreciated 170% in the last year

Might be a good time to buy

What exactly is Grayscale?
Grayscale is a trust that was started in 2013
Grayscale BiTCoin Trust, GBTC, allows investors to use retirement funds to invest in bitcoin
Grayscale Ethereum Trust ETHE allows investors to use your 401K or IRA to invest in ethereum
Grayscale Large Cap allows you to use retirement funds to invest in a group of 6 cryptos, including bitcoin, ethereum, Solana, Cardano, and Uniswap

What are the advantages of cryptocurrency exposure through grayscale?

Normally, a person cannot use any retirement accounts like 401K or IRA to buy or invest in cryptocurrency. Since Grayscale products can be purchased like a stock or mutual fund on some 401K and IRA accounts, it gives a person the option to use those accounts to invest in cryptocurrency

Storing crypto is easier with Grayscale
Normally, if a person owns cryptocurrency, there are two ways to store it. The first is a physical hardware wallet. If a person loses their physical wallet or it is destroyed, like in a fire, they could potentially lose all their funds. The second option is using an online digital wallet. If a hacker accesses the online digital wallet, or if a person forgets their password, an investor could also lose all of their cryptocurrency as well.

If a person invests in Grayscale, they do not directly own the crypto. Thus, they do not need to purchase and set up a physical wallet, and they dont need to manage an online digital wallet, and expose themselves to those risks

Taxes are easier with Grayscale
Determining taxes on a Grayscale trust is simpler than determining taxes on cryptocurrency profits because there are no clear guidelines in the US

What are the disadvantages of Grayscale?
The price of Grayscale products only approximates the price of the cryptocurrency
The trust charges a 2% management fee which is double the 1% that many mutual funds charge

Is it cheaper to buy crypto directly, or through Grayscale?
Currently, the cost of crypto through Grayscale is at about a 14 percent discount
That means one hundred dollars of crypto would cost about 86

How many investment firms own stakes in the grayscale trust?
At least 47

What Options does Grayscale have?
Bitcoin
Ethereum
Digital Large Cap
Defi
Solana
Stellar
Decentraland
Basic Attention Token

Chainlink
Filecoin
Litecoin
Zcash
I would focus on the first eight options

Is Grayscale a good choice?

It depends. Grayascale might not be the best choice if a person has a large non retirement fund, and is experienced with cryptocurrency wallets- they are probably better off just buying cryptocurrency directly

However, if a person doesnt want to deal with buying and storing a physical wallet and worry about losing it or it being destroyed, or doesnt want to download a digital wallet and worry about losing the password or their digital wallet being hacked, Grayscale would be a better choice

If a person has most of their investment money locked up in a retirement account, and wants to invest in cryptocurrency, then investing in Grayscale is one of the few ways to make that possible

buy Grayscale at a 22-30% discount in a fund that has appreciated 170% in the last year?

Sounds good to me-I already have a significant amount of grayscale products and will continue to periodically add to my portfolio
I own the Grayscale bitcoin, ethereum, and large cap funds
I would also purchase the grayscale Defi fund but its not available in my retirement account

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