Would You Put Crypto in Your 401(k)?
401(k)s aren’t the most exciting way to invest.
The Census Bureau says most Americans don’t contribute anything to their employer’s retirement plan.
But what if instead of buying stocks, you could invest a portion of your paycheck in crypto?
Fidelity, the largest 401(k) provider in the U.S., wants to let you do just that.
On Tuesday, the financial giant said it will offer bitcoin in its retirement plans later this year.
Employees will soon be able to invest up to 20% of their contributions in bitcoin.
It’s the latest sign that cryptos are transforming the $100 trillion global financial industry.
Here’s why Fidelity’s move could help fuel a massive crypto rally…
401(k)s Take the Emotion Out of Investing
The crypto markets are known for their volatility.
We’ve often seen drops of 50% or more followed by 100%-plus rallies.
One crypto — what we call the “Next Gen Coin” — even soared over 500% last year.
But as Steve Fernandez explained on Monday, emotional trading leads to market extremes.
Investors dump their crypto when prices are low. Then they buy back in once prices peak.
401(k)s take the emotion out of investing.
With Fidelity’s crypto retirement plan, employees will automatically buy cryptos every paycheck.
And they’ll hold onto those cryptos until they’re ready to retire.
That will help stabilize the crypto markets and lead to higher and higher prices over time.
Plus, 401(k)s are the easiest way to invest.
Employees will be able to buy cryptos without signing up for a crypto exchange like Coinbase.
Pay Less Taxes for Your Crypto
401(k)s have special tax benefits you don’t get at crypto exchanges.
That’s because traditional 401(k)s take dollars out of your paycheck.
These contributions lower your income, meaning you pay less in taxes.
If Roth 401(k)s are an option, that could be an even better way to buy cryptos.
Roth retirement plans make you pay taxes upfront. But then you don’t need to pay taxes later.
That means if cryptos in your 401(k) go up 7,200%, like Ian King says the Next Gen Coin could, then your gains are likely going to be tax-free.
And if employers match contributions, that’s even better.
Get Ready for the Next Crypto Rally
Fidelity currently manages $2.7 trillion in its retirement plans.
That’s over three times bigger than bitcoin’s market cap.
So just imagine if a portion of that $2.7 trillion became bitcoin instead of stocks…
We’re talking about hundreds of billions of dollars flooding into bitcoin.
And Fidelity isn’t stopping there.
Dave Gray, the company’s head of workplace retirement offerings, said other cryptos will be available in the future.
That would definitely include the Next Gen Coin.
Gray added: “We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.”
And if other financial firms add cryptos to their retirement plans as well, then prices could soar even higher.
After all, the crypto market is still in its infancy.
The entire market is worth less than $2 trillion right now.
Compare that to the global financial market, which is worth $100 trillion.
The money is just starting to flow in. So now is a great time to buy cryptos.
And if you’re not familiar with crypto investing, Ian King has you covered.
Assistant Managing Editor, Banyan Hill Publishing
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