Fidelity now allows clients to put bitcoins in IRAs

http://blogs.marketwatch.com/thetell/2013/12/11/fidelity-now-allows-clients-to-put-bitcoins-in-iras/

by a3voices • 13 years ago

142 94 13 years ago

blogs.marketwatch.com

sheetjs• 13 years ago

Now for the crash ... (the retirement accounts are usually the last ones holding the bag)

fat0wl• 13 years ago

yeahhhhhhhh... first thing i thought when i saw this: "this is dark"

simbolit• 13 years ago

for the non-Americans: https://en.wikipedia.org/wiki/Individual_retirement_account

infruset• 13 years ago

Thanks! I almost thought this was about some cult trying to finance armed Irish groups using Bitcoin.

SilasX• 13 years ago

It was an unfortunate choice of acronym in the legislation.

gojomo8• 13 years ago

SecondMarket's BitcoinTrust appears to still be limited to accredited investors, though.

Wealth tests ought to be just as illegal as other forms of discrimination.

jorgem3• 13 years ago

> Wealth tests

Apparently, you can lie: http://www.quora.com/How-do-you-become-an-accredited-investo...

JumpCrisscross• 13 years ago

That constitutes fraud. If the SEC found out the company would get fined and the individual potential fines, asset forfeitures, and even jail time.

javert3• 13 years ago

Clearly we shouldn't let middle class people fund budding enterprises.

It is better to forcefully stop rational people from risking their money, in an attempt to protect irrational people from making irrational decisions.

People who want to let the middle class take risks that could help them become wealthy are operating under the premise that this is supposed to be a free country---a premise that the country's elected and respected political leadership has wisely decided to adamantly ignore.

drone8• 13 years ago

How can you make a rational decision when you have incomplete, or false information?

drone8• 13 years ago

It's a test that's defined by law [1], ostensibly to protect the non-wealthy from being scammed easily. [2] AFAIK, the intent is to prevent scammers from directly selling highly risky investments to the average Joe without explaining to them the complete depths of the risk.

[1] http://www.sec.gov/answers/accred.htm

[2] http://www.institutionalinvestorsalpha.com/Article/3214072/S...

fragsworth5• 13 years ago

Yeah, well, it also fucks over an intelligent but average-income Joe from being allowed to invest in deals that have as high of a return.

For instance, I know right now that I'd like to invest a chunk of cash into several VR companies. I can't, though, because I'm not accredited. I have to wait for their IPOs, which will happen way after everyone already finds out how much it's all worth.

ISL• 13 years ago

I once rode in a taxi where the cabbie regaled me with his retirement plan; each time he'd saved up enough money, he'd go on a trip to Atlantic City and try to win. He was fairly certain that this was a good idea.

Please don't play with more than you can afford to lose. It's bad for bitcoin, and a crash might be bad for you. If you can't afford to retire, society may compel others to help you. Please be responsible.

I'm not a tax lawyer: The tax-free nature of Roth IRAs might render some of the questions of bitcoin taxation less of a concern?

lukifer• 13 years ago

The funny thing about the cabbie story is that it only takes one statistical outlier success story for the meme to spread to a thousand others who fritter away their savings in this manner.

I've also started to wonder recently about the relationship between the gambling instinct and entrepreneurship. While there is obviously a distinction (entrepreneurs are often pursuing genuine passions and/or creating real value), when you look at the real-world risks and returns, it certainly seems to have a similarly irrational component, both for founders and investors. (Not that I'm judging; the line between genius and madness is a thin one.)

gnaritas2• 13 years ago

That's because most people reason by anecdote rather than actual statistics, sad but in my experience true.

NhanH2• 13 years ago

There is the fact that to a certain extent, entrepreneurs know their odds going in. Gamblers more likely than not doesn't.

fragsworth5• 13 years ago

Please don't play with more than you can afford to lose.

When considering investing in something like bitcoin, draw out a table of what you expect the outcome to be 10 years from now. Rows can be bitcoin price ranges (each row having what you believe is a roughly equal chance of happening), and columns can be how much you invested in it. Rate your expected happiness (use some scale -100 to 100?) from each result in each square. Keep in mind that if bitcoins reach a high number like $100,000 and you didn't invest, you will feel like you lost that money. (I feel this way now, from not investing previously - and it kills me. Happiness -25 maybe.)

The only logical thing to do, at this point, is pick the column that results in the highest happiness.

It turns out that for those of us who believe there's a reasonable likelihood (25% or greater) that bitcoins will be very high ($1 million or higher) over its lifetime, the logical thing to do is actually to put the vast majority of our savings into bitcoin. Nearly all of it, in fact.

yen223• 13 years ago

Back in 2007, you'd be a fool if you didn't pour your life savings into real estate, since prices could only go up, right?

pfisch2• 13 years ago

Holy hell, this is some crazy advice.

If you have a sizable savings that you have been building for 5 or more years then the vast majority of your savings shouldn't be invested in any single asset.

SamReidHughes• 13 years ago

It turns out that for those of us who believe there's a reasonable likelihood (25% or greater) that bitcoins will be very high ($1 million or higher) over its lifetime

If you're gambling on the hope that all of M1 in the world will be replaced by Bitcoin and actually have come up with any sort of likelihood of that happening then you should reevaluate your ability to have ideas. In your case you think the likelihood is "25% or greater" which is to say you've got some probability distribution of probabilities -- that's not how reasoning about probability works in any high-functioning investing mind. Why can't you just collapse that to an actual percentage? Because it's all just made-up numbers.

gnaritas2• 13 years ago

You shouldn't invest nearly all of your savings in anything; the most basic of investing advice is diversify and don't invest what you can't afford to lose.

dreish• 13 years ago

You are vastly overestimating how happy millions of dollars will make you. Google around a little and you might actually put a negative number on it.

If you get the numbers right, you will arrive at the same advice any financial advisor would give you: in something as novel and hard to price as bitcoin, only invest risk capital, defined as money you could lose in its entirety and still have a sound financial plan.

ars_technician2• 13 years ago

You do realize your same logic applies to looking at a roulette wheel?

You can see that it hit a black number 20 times in and feel remorse for not letting 10 dollars ride all of the way up to 10 million for that run. -25 happiness.

You are making the same mistake gamblers and amateur stock pickers make all of the time. It's really sad and it destroys lives and relationships depending on how many people you also convince this is a good deal.

Hermel• 13 years ago

Here's a better plan. If you believe that there is a reasonable chance (e.g. 10%) that Bitcoin will raise in value 100-fold again in the next few years, do the following: think about how much wealth you'd need to live your dream life (i.e. spend all your time on your pet projects). Say that's 3 million. Then try to put 30k into Bitcoin. If you win, it will change your life. Otherwise, you continue as you did before. Also: do not diversify. If you put 15k into two altcoins each, and only one of them is successful, you are still stuck with your old life.

This plan is based on the idea that there is an amount of money X that allows you to significantly change your life, while amounts below X merely give you incremental improvements. If that's not the case, the plan is obviously not for you. :)

samstave• 13 years ago

I see all these ways to spend the mythical BitCoins, zero ways fro me to create some.

Is there any feasible way to get any BTC when I only have my home couple of machines (none of which are GPU giants)?

seiji2• 13 years ago

Webcam + Skype + Wallet ID + Lonely Person = Bitcoins.

bdamm• 13 years ago

This only works for women.

maxerickson2• 13 years ago

It isn't what you mean, but you can get some by buying them.

Mining bitcoin without special purpose hardware is pointless. Your best bet would be to predict whatever copycat was going to get popular and have mined some of it before that happened (but this isn't a simple prediction to get right...). Then you can probably trade those for bitcoin.

nwh2• 13 years ago

At this point there's almost 200 "the new thing" alt coins. Everybody wants to be in on "the new thing", which makes them all just pump and dump economies. It's a futile idea.

DustinCalim3• 13 years ago

You can mine litecoins and sell them for bitcoins... I hear there's a ASIC LTC miner around the corner...

Helianthus2• 13 years ago

This is actually really funny, though I don't quite have the words to explain why I think it's humorous.

tuxidomasx• 13 years ago

The easiest way to obtain bitcoins (aside from buying them) is to offer a service or provide a value and accept bitcoins as payment.

smtddr• 13 years ago

I am super-pro bitcoin supporter, but somehow I have a horrible feeling about this...

Aqueous2• 13 years ago

Why?

The more mainstream investors come on, the more people will have a stake in BitCoin, the less single individuals can influence or manipulate the price, the more points of failure there are, the more stable it will be.

I have a fidelity IRA with risk spread across very risk-averse mutual funds with dependable year after year growth. For me, this will just be one more thing I can add to my already fairly stable IRA, shielded from taxes, which is great...

jorgem3• 13 years ago

> the less single individuals can influence or manipulate the price

972 people control half of all bitcoins, right now.

What makes you think things will get better?

source: http://www.businessinsider.com/927-people-own-half-of-the-bi...

Lerc• 13 years ago

the more points of failure there are, the more stable it will be.

As with life.

jorgem3• 13 years ago

I could not find XBTFUND symbol (or any other search with the term "bitcoin") when I went to Fidelity.com

Anyone know the symbol?

KVFinn• 13 years ago

Seems like most mainstream coverage about bitcoin is in the context of an investment instead of a currency.

I wonder if this is hurtful in the long run -- thinking about bitcoin as something to stock away for retirement rather than a useful tool in transactions. Great for prices in the short term I guess.

kolev5• 13 years ago

It is hurtful - they are now truly turning it into DotCom 2.0 - they way the media created a hype back then!

if_by_whisky3• 13 years ago

All currencies are also investments. Investments that have additional properties that make them useful as a medium for exchange. Like divisibility, portability, etc... Btc is so volatile that it probably is, for many, better as an investment for the time being. Once there's less risk and more confidence, we could see that change.

brokentone• 13 years ago

In fairness this isn't directly storing bitcoins in a fidelity wallet, there is now an EFTish fund that is bitcoin-backed accessible to fidelity customers.

3am• 13 years ago

Oh my god, is that ever inaccurate. It's a trust available only to accredited investors that happens to invest in Bitcoin. By that logic, you can put just about anything in your IRA.

Here's a random Google result about the variety of bizarre funds out there: http://money.usnews.com/money/personal-finance/articles/2009...

edit: corrected my mistaken categorization of SecondMarket investment vehicle.

edit: invest in fine art (sorry, no funds open to new investment) - http://www.thefineartfund.com/index.php/en/products-and-serv...

edit: invest in vintage wines - http://www.wineinvestmentfund.com/index.aspx ... and so on.

nitrogen• 13 years ago

The ability to borrow art from the Fine Art Fund sounds like a fantastic benefit of being an investor.

cjaredrun• 13 years ago

are you /u/kaax?

kolev5• 13 years ago

Correct me if I'm wrong, but isn't this the end of Bitcoin? It was created to keep us independent from Wall Street and governments and now when Big Money is interested in (profiting from) it, it's Game Over.

damian2000• 13 years ago

But at least it would have served its purpose of redistributing some wealth from Wall Street into the pockets of first adopters and programmers. ;-)

kolev5• 13 years ago

True, but those who will join late will be the big losers.

bdcravens2• 13 years ago

The moment that Bitcoin hit $30/BTC, it was over. The focus on BTC creating more fiat currency means that 99% of those with a position in BTC are missing the point.

if_by_whisky3• 13 years ago

It was not created to do anything of the sort.

kolev5• 13 years ago

Oh, and that's why the guy/guys used a pseudonym? It was exactly created for that purpose - (pseudo)anonymous electronic cash equivalent, which has just one purpose.

negamax• 13 years ago

This is a great idea to offload the high prices to the last mile. Now there just need to be a major push on news about Bitcoin and it be a perfect slaughterhouse.

Fidelity now allows clients to put bitcoins in IRAs

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