IRA Financial’s Adam Bergman welcomes financial advisor, Andy Edstrom, who wrote the book, Why Buy Bitcoin, to discuss the benefits of investing in Bitcoin and other cryptocurrencies.
We are thrilled to be joined by Andy Edstrom, financial advisor and member of the investment committee at WESCAP Group. He is also the author of the book, Why Buy Bitcoin: Investing Today in the Money of Tomorrow (available on Amazon). In the podcast, Mr. Edstrom talks about his experience in investing in Bitcoin and other cryptocurrencies, and why you should consider doing it yourself. Of course, the opinions shared are that of Mr. Bergman and Mr. Edstrom, and not of their respective companies. As always, these podcasts are for educational purposes, and you should consult with a financial advisor before investing!
What is Bitcoin?
Bitcoin is the most popular of so-called cryptocurrencies, or digital money. The currency, which is unlike traditional fiat, such as the US dollar, is based on blockchain technology. It’s not banked by any government and essentially lives on the internet. “Coins” are mined by using sophisticated computers to unlock token by solving complicated cryptographic problems. There is a finite amount of Bitcoin that will be available. This is unlike traditional currency, where the government can’t print more money as needed. This is has been quite evident in dealing with the COVID-19 crisis. The problem with that is it will lead to inflation and affect the power of the currency.
Right now, especially in the US, Bitcoin is mostly an investment. You can invest in it just like you would stocks, bonds and even real estate. However, many countries are embracing cryptos even more. You can buy and sell goods and services with your digital money. Every transaction is available for anyone to see, albeit anonymously. You can track where the Bitcoin has come from, through an online ledger.
Why Buy Bitcoin?
Bitcoin is still quite young, although it’s been around for a decade. It’s very volatile at times with swings in the thousands of dollars from day to day. As with any type of investment, you have to get it at the right time. If you jumped on the bandwagon when one Bitcoin equaled one dollar, you could’ve retired by now. The old adage rings true – buy low, sell high. For every downturn Bitcoin has seen, it’s risen back up. As of this writing, it’s hovering around $9,700.
As Mr. Bergman mentions, if your financial advisor has not brought up Bitcoin as an investment, he or she is doing you a disservice. Of course, you don’t want to risk it all. But this rings true for any investment. It’s all about diversifying your holdings. You don’t put all your money into one stock or one asset class. You spread it across different sectors, like technology, precious metals, cryptos and real estate. A zero percent allocation in Bitcoin is not the best plan right now. Cryptocurrencies are not going anywhere, in our opinion.
How Should You Invest?
The best way to invest in Bitcoin is with retirement funds. The reason being is that all the gains are tax-deferred. If you have a Roth, those gains are tax-free when you reach retirement! The only way to do this is by self-directing your retirement funds. Anyone can open a Self-Directed IRA. Further, if you are self-employed, you can start a Solo 401(k). Both plans, when opened at the right provider, will allow you to invest in Bitcoin and other cryptos in a tax-advantaged way.
Allocating some of your funds into cryptos will help you diversify your savings and acts as a hedge against inflation. Since Bitcoin is not regulated by any government, the currency cannot be reproduced and suffer from inflation effect. Less and less people use physical cash to buy something nowadays. Usually, you just whip out a debit or credit card to make a purchase. Online retail continues to rule the marketplace. It makes sense that a digital currency is the next step.
Thanks for Watching!
We’d like to thank Mr. Edstrom for joining us for this Adam Talks podcast! Please, watch/listen to educate yourself about Bitcoin investing. Be sure to pick up the book, Why Buy Bitcoin to learn ever more!
If you want to check out our complete library of over 230 podcasts, head over to our SoundCloud page!