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Learn more and get started today with a special new member discount. She took a simple, straightforward approach to buying her coins, purchasing them through PayPal rather than trying to use a dedicated crypto exchange or signing up for a crypto wallet.
She believes others should invest some money into the coins as well by using a specific approach called dollar-cost averaging. That involves regularly buying coins over time, and purchasing the same amount of Bitcoin or your other chosen currency each month. But the key thing that's important about dollar-cost averaging is that you consistently spend the same amount of money to buy the same asset at a set time on a monthly basis.
This eliminates the problem of market timing, which can be especially tricky to do if you're buying a volatile asset -- which most cryptocurrencies are. Although Orman has obviously adopted the view that there's a potential to make money with crypto investing, she doesn't necessarily believe everyone should be adding this asset to their portfolio. Do you understand why a Roth IRA is an account that I love no matter what you're doing, I don't care if you're buying cryptocurrencies in it or not.
But if you're thinking about buying cryptocurrencies within a retirement account, a Roth IRA is the way to go. Those are all the pros, what are the cons? The only con of a Roth IRA is this. If you invest and your Cryptocurrency goes down, you don't get to take it off your taxes, you just lost the money, if you decide to sell. Just that simple. Why do I not want you if you are an investor to invest in a traditional IRA if you're going to be buying cryptocurrencies?
For the following reasons. Yes, when you put money into a traditional IRA a you get a tax write off, but who cares about that? It's not that big of a deal. I care about that, when you put money into a retirement account and you make proper investments and it grows and it grows and it grows and it grows that you get to have access to that money. Absolutely tax free. You would also pay ordinary income tax at that time.
But you know, if you wait till after 59 a half and now you want to use it for something and you go to take it out, you're going to be paying ordinary income tax on it. That could be a lot of money. Why would you want to pay ordinary income tax on an investment ever? Just to get a small tax write off today. Now I understand that some of you may be in what you think is a high tax bracket right now. The truth of the matter is I will bet you anything that in the long run if you are in a high tax bracket today, you are going to be in a higher tax bracket a few years from now or when you go to take this money out.
Because of the deficits that the United States of America are running and the total debt that this country is in. So, forget the tax write off for today and look at the future that anything that you have in this retirement account you get to keep. But that is not true with a traditional IRA.
So, you invest and you are investing in cryptocurrencies and now it takes off and later on you go to take it out. Again, you're going to pay ordinary income tax on whatever money you take out at the time. Also, you have to remember that it is a traditional IRA, so at the age of 72 you have got to start making required minimum distributions, even if you do not need that money. You have to do it and you have to pay taxes on it.
If the money is in there and you die, for anybody other than your spouse, when they go to take it out and they have got to wipe this account clean within 10 years. They absolutely are going to pay ordinary income taxes on it as well. There is no true benefit to putting it in a traditional IRA.
Why would you want to do that? It makes absolutely no sense whatsoever. You can't take losses on it really. It's just such a waste. Do you all understand what I am saying here? Now let's just say for whatever reason you can't convert, you can't open up a Roth IRA on your own. You make too much money. If that is the case then you would be better off opening up just an individual investment account. Because if you had an individual investment account that you could do at Coinbase or FTX or wherever you want to do it, when you purchase cryptocurrencies, you do not pay any taxes on them while they are sitting there.
So, if you are an investor and you are investing for the long haul, you're not going to pay any taxes on it. And if you own it for more than one year, you pay capital gains tax, there's no penalty for you to withdraw it. Hey if you need money, you're invested and something comes up and you need the money. You just sell whatever you have, you pay the taxes obviously and you withdraw the money, not a big deal.
Also, you have to know if you invest and you lose money and you sell it, you can take that off your taxes. You die, it passes down to your beneficiaries and they currently, this could change everybody, tax laws can change this. In an individual investment account, there is no required minimum distributions whatsoever. So, you're far better off if you are an investor, having either a Roth IRA an individual investment account where you buy cryptos, if that is what you want to do.
So, am I making sense to all of you. Now, if you happen to be a trader and you're buying and selling, buying and selling, in and out, in and out and the only thing you can qualify for is a traditional IRA, then do it in a traditional IRA. Because if you're buying and selling and buying and selling, you don't have to pay any taxes on it obviously until the long one, until you are of age and you go to withdraw the money.
I don't know. Most of you are not traders. So, these are just something that I want you to think about now. Why Suze Orman have you been concentrating so much on crypto currencies? Because a very fascinating thing is starting to happen with some of the firms that offer cryptocurrencies, and if you go to BitcoinIRA. Now the technical name for this is called staking and it is far more complicated than for me to be able to explain on a podcast right now. But I do think in the future you are going to see because it's happening right now, that it is possible for you to make a lot higher interest rate in some of these firms than you could possibly make in a bank or you know in stocks that are paying less than that in dividends and things like that.
Now, is it secure? I don't know, I have to tell you, I don't know, I don't think it's that secure. They say it's secured, it has insurance, it has this and that but nobody has ever tested it, it's not like FDIC in a bank for instance. Same thing with a credit union. So, I don't know how safe it currently is to tell you the truth.
But it's an interesting thing to see the interest rate that they're starting to pay. Now I don't know if that's safe or not. So, I put in my FTX, it's called earn account. So, I'm being your Guinea pig here everybody, I'm testing these things out to see how they work, what protects us, what doesn't protect us. But it's an interesting thing to think about with interest rates as low as they are, without us really being able to get a lot for our money.
Just something to think about for many of us who are more risky. This is not, you put money in a credit union or a savings account that you need to know is safe and sound. This is for money again right now anyway that, okay if something goes wrong, you learned a lesson and many of you out there have that kind of money, believe it or not.
But I think it's an interesting thing to start to learn about, every one of us because this could be the way of the future and so we need to know about it. So, bottom line is this, I don't have a problem with you purchasing cryptocurrencies in an individual retirement account as long as it is a Roth retirement account. Do we all have that straight right now? I also feel like if you're in a traditional IRA and that's where you want to do it. If you know that it has to stay in the traditional IRA, in my opinion, if you're not a trader and you are an investor for the long run, I personally think you would be far better off in an individual investment account with one of these firms and it's just that simple.
So, I hope that explained it in great detail and maybe this is a podcast that you listen to over and over again, so that you really get it right, because I do think that there will come a day, that investing in cryptocurrencies may not be or seem as complicated as they are right now, it may be something that one day you want to do.
Especially if you're listening to this podcast and you're younger and you want to see what happens. But I do think it's important to know about this, because one day I think it may be more of the norm than any of us have any idea. So, there you go, KT said Suze, are you sure you don't want me to do a podcast with you again today? They must miss me terribly. And I said no, KT, we're going to have you back Thursday. So, I promise all of you Mrs.
Travis will join us on Thursday for Ask Suze Anything. In the meantime. I just have to wish my sister and brother-in-law Lynn and Tom Stender, A happy 45th anniversary. Yesterday was their 45th anniversary, Lynn and Tom we love you both so much and again are so, so thrilled that you have each other and that you're loving your life as much as you are.
All right, everybody until Thursday. Stay safe, stay strong and stay secure. See you then. Bye, bye. To ask Suze a question, email AskSuzePodcast at gmail. Toggle navigation.