To be financially stable is something that most of us wish we could enjoy. There’s an incredible range of benefits from being financially stable, but most of them can be described as living in comfort, capable of enjoying the many wonders of life without too many hassles, from experiences to hobbies, from investing to saving… Financial stability is a dream that, depending on your situation, might be achievable.
The problem is that not a lot of people are capable of being financially stable forever. Most of us will be unable to work in our fields of expertise once we reach elderhood, since our minds and bodies become duller, making most things substantially harder.
Therefore the concept of retiring exists. Retiring can be described as the process in which we prepare to deal with elderhood, and it often involves several processes and practices. Some companies out there reward their hardworking employees through benefits once they have worked in their environment for several years, whereas others might not provide this benefit.
There’s also the chance that you might fall ill, or just not be able to complete the amount of work you are required to fulfill to get said benefits, thus practices like saving and investing become very reliable options for people wanting to plan their retirement.
Although both practices are considered very reliable, each one is capable of fulfilling a very specific need. For example, if you check out this article, you’ll notice that saving is often considered a better choice for short-term goals, whereas investing is a better choice for long-term plans that surpass the 5 years’ time frame.
On the other hand, you also have the option of relying on an individual retirement account, which is also known as an IRA. Nowadays, IRAs differ in types, with each type focusing on different assets. Traditional IRAs work with money, whereas gold-backed IRAs work with precious metals.
But there’s a particular type of IRA that has started to get a lot of attention over the last couple of years, and they are known as Bitcoin individual retirement accounts. In this article, we will mainly focus on this type of IRA, but before we get into that, let’s discuss why IRAs can be very appealing.
Understanding the Difference Between Saving and Investing
As mentioned earlier, saving and investing are very good practices, at least financially speaking. However, they are both very different in nature. Firstly, saving tends to be a very safe practice since it virtually involves 0 risks. On the other side of the coin, investing has a chance of making you lose money, or even all your money if you make the wrong decisions.
Still, investing is well known for being a better long-term practice. The reason for this is the amount of profit you can generate through investing, which is larger in comparison. There’s also the fact that investing can protect your wealth from an economic phenomenon like inflation and devaluation.
Saving, although safe, does not provide the same level of protection against said phenomenon, making it not such a viable choice for the long-term run. Even then, some IRAs and saving accounts can be feasible, but saving is something that is done for specific reasons, such as:
- Improving your quality of life
- Fulfilling goals that are below the 5-year time mark
- Enhancing your professional capabilities
- Accumulating money for investments, either in assets, goods, or items that will earn you more money in short-term or long-term run.
Thus, if you are planning your retirement, you might want to consider the option of investing your money, not only because it is a great way of generating a profit through beneficial transactions, but mainly because it is a great way of diversifying your money. As mentioned at https://www.nerdwallet.com/article/investing/diversification, this is very important when it comes to finances.
Why Diversification Matters so Much
Diversification is frequently considered as the most reliable way to protect your wealth from different events, both involving socio economic circumstances and poor investing decisions.
The logic is very easy to understand since it follows the principle of not entrusting all your efforts on one particular asset. Let’s say you put 80% of your wealth in one good, and its value unexpectedly drops by a big margin. The amount of money you will lose will be astronomic!
On the other hand, if you put 10% of your wealth in said asset, and you spread the other 70% in many different choices, even if their value decreases, you will still have a great percentage of your wealth. This is what is known as diversification!
Of course, you might think that the profit you will make in case said asset’s value increases will also be less, but in the world of investing, protecting your money from loss is always better than earning a profit, especially when we talk about your retirement plan. Here’s where Bitcoin IRAs enter the play.
Bitcoin-Based IRAs and Diversification
Bitcoin-based individual retirement accounts are IRAs that allow the effecting of transactions using your money, for the sake of investing it in cryptocurrencies, a type of digital currency that is blooming in today’s market and is expected to increase in value in the next couple of decades. Thus, a bitcoin IRA investment company can be considered a form of investment that also allows diversification in many different types of cryptocurrencies.
Considering the amount of time, you would usually have to wait to have access to the money you will put inside of a standard individual retirement account, these are great to build a portfolio and spread your wealth over many different types of access, which can be used to earn a profit in the long-term run while you become more experienced in the art of investing in cryptocurrencies.