Page 106 - Forbes - USA (February 2018)

THE INVESTMENT GUIDE

REENGINEER YOUR RETIREMENT | BITCOIN IRA

The Hail Mary

Retirement Plan

LOOKING TO TURBOCHARGE YOUR RETIREMENT ACCOUNT? PUT SOME CRYPTO IN
YOUR IRA, BUT ONLY IF YOU CAN STOMACH EXTREME RISK AND HIGH FEES.

BY JEFF KAUFLIN

n the spring of 2017, Kenneth M.,
a physician in his mid-50s, was
looking for the right medicine to
Irejuvenate his retirement savings.
Drawn to technology, he found himself
watching YouTube videos of entre-
preneurs discussing cryptocurrencies
and their real-world applications. Th e
underlying concept of a blockchain—
a technical infrastructure over which
information can move quickly, cheaply
and securely—made his eyes widen.
He was familiar with the barriers that
prevent electronic health records from
moving smoothly between health care
providers, and he became excited by
the problems blockchain might solve.

The doctor liked the idea of invest-
ing in virtual currencies in a retire-
ment account, because using an IRA
meant he wouldn’t have to worry about
the tax implications of buying or sell-
ing within the account. Th rough a
Google search, he discovered Bitcoin
IRA, a three-year-old company that
partners with an IRA custodian and
a cryptocurrency wallet—like a bank
account for virtual currencies—to let a coin to $13,545. Ether’s value rose by greed, a component of fear of loss,”
people invest. nine times. Today the physician’s Bit- says Chris Kline, Bitcoin IRA’s COO,
So he dived in with a risky bet, coin IRA portfolio is worth $2.5 mil- who suggests customers put from 5%
sinking 15% of his retirement savings, lion, making up more than 50% of his to 20% of their retirement assets in
or $350,000, into Bitcoin and other retirement savings. “It will require me virtual currencies.
crypto-assets like Ether and Litecoin. to do some rebalancing,” he says. Bitcoin IRA, based in Sherman
As he watched prices climb, he caught But he’s not ready to take his foot Oaks, California, isn’t a fi nancial
crypto fever, pouring in another off the gas yet, and he’s not alone. advisor, and it’s not regulated by the

$250,000 over the summer and deviat- Among the dozen or so Bitcoin IRA SEC like Vanguard or by the Federal
ing from his otherwise disciplined investors Forbes spoke with, only four Reserve like Wells Fargo. It’s a largely VIKTOE KOEN FOR FORBES
investment style. From May to Decem- have taken money off the table to unregulated “financial conduit” that

ber 2017, Bitcoin surged from $1,747 secure gains. “There’s a component of makes use of self-directed IRAs, which
104 | FORBES FEBRUARY 28, 2018