Bitcoin: A Digital Store of Value
Douglas Boneparth, the president and founder of Bona Fide Wealth, recently expressed his perspective on bitcoin, describing it as the digital equivalent of gold or a store of value in the digital realm. He highlighted the contrasts in approach between traditional trade finance behemoths such as Blackrock and Fidelity, and those more ingrained in the cryptocurrency world, such as Bitwise and Vaneck.
Investments That Produce Alpha
In a recent discussion on the "Bloomberg ETF IQ" show with Eric Balchunas, Bloomberg’s senior ETF analyst, Boneparth shed light on the emerging spot bitcoin exchange-traded funds (ETFs) and the categorization of bitcoin as an asset class. He compared bitcoin to digital gold, viewing it as a digital store of value. Boneparth acknowledged that the price action of bitcoin may not always align with its store of value function but emphasized the importance of alternative investments in a portfolio. He stated that clients are always seeking non-correlated assets that have the potential to generate alpha.
Boneparth mentioned that he has not received significant inquiries, particularly from the baby boomer generation, regarding the new spot bitcoin ETF. He noted that he primarily works with individuals in their mid to late 30s who have been discussing and educating themselves about cryptocurrency and bitcoin before there were product offerings available.
The Differences Between Native Crypto Companies and Established Trade Finance Firms
During the show, host Katie Greifeld asked Boneparth about his perception of the differences between native crypto companies like Bitwise and established trade finance firms such as Blackrock and Fidelity. Boneparth highlighted Bitwise's contributions to Bitcoin Core developers and suggested that individuals who believe in blockchain and crypto might find a crypto-native fund more appealing. He concluded that it remains to be seen which type of company will surpass the other over time.
What do you think about the Bona Fide Wealth president's statements? Share your thoughts and opinions about this subject in the comments section below.
Frequently Asked Questions
How much of your portfolio should you hold in precious metals
To answer this question we need to first define precious metals. Precious elements are those elements which have a high price relative to other commodities. They are therefore very attractive for investment and trading. Today, gold is the most commonly traded precious metal.
There are however many other types, including silver, and platinum. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also unaffected significantly by inflation and Deflation.
All precious metals prices tend to rise with the overall market. However, they may not always move in synchrony with each other. For example, when the economy is doing poorly, the price of gold typically rises while the prices of other precious metals tend to fall. Investors expect lower interest rates which makes bonds less appealing investments.
However, when an economy is strong, the reverse effect occurs. Investors choose safe assets such Treasury Bonds over precious metals. These precious metals are rare and become more costly.
Diversifying across precious metals is a great way to maximize your investment returns. Additionally, since the prices of precious metals tend to rise and fall together, it's best to invest in several different types of precious metals rather than just focusing on one type.
Is it a good idea to open a Precious Metal IRA
Precious metals are not insured. This is the most important fact to know before you open an IRA account. There is no way to recover money that you have invested in precious metals. This includes losing all your investments due to theft, fire, flood, etc.
Protect yourself against this type of loss by investing in physical gold or silver coins. These items can be lost because they have real value and have been around for thousands years. If you were to offer them for sale today, they would likely fetch you more than you paid when you bought them.
If you decide to open an IRA account, choose a reputable company that offers competitive rates and products. It's also wise to consider using a third-party custodian who will keep your assets safe while giving you access to them anytime.
You won't get any returns until you retire if you open an account. Do not forget about the future!
Is it a good retirement strategy to buy gold?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
Physical bullion is the most popular method of investing in gold. You can also invest in gold in other ways. You should research all options thoroughly before making a decision on which option you prefer.
If you don’t need a safe place for your wealth, then buying shares of mining companies or companies that extract it might be a better alternative. If you require cash flow, gold stocks can work well.
You can also put your money in exchange traded funds (ETFs). These funds allow you to be exposed to the price and value of gold by holding gold related securities. These ETFs may include stocks that are owned by gold miners or precious metals refining companies as well as commodity trading firms.
How much is gold taxed under a Roth IRA
Investment accounts are subject to tax based only on their current value and not the amount you originally paid. If you invest $1,000 into a mutual fund, stock, or other investment account, then any gains are subjected tax.
The money can be withdrawn tax-free if it's deposited in a traditional IRA (or 401(k)). Taxes are only charged on capital gains or dividends earned, which only apply to investments longer than one calendar year.
Each state has its own rules regarding these accounts. Maryland's rules require that withdrawals be taken within 60 days after you turn 59 1/2. Massachusetts allows you up to April 1st. New York offers a waiting period of up to 70 1/2 years. To avoid penalties, you should plan ahead and take distributions as soon as possible.
How to Open a Precious Metal IRA
First, decide if an Individual Retirement Account is right for you. You must complete Form 8606 to open an account. For you to determine the type and eligibility for which IRA, you need Form 5204. This form should not be completed more than 60 days after the account is opened. Once you have completed this form, it is possible to begin investing. You can also contribute directly to your paycheck via payroll deduction.
If you opt for a Roth IRA, you must complete Form 8903. Otherwise, the process will be identical to an ordinary IRA.
You'll need to meet specific requirements to qualify for a precious metals IRA. The IRS states that you must be at least 18 and have earned income. Your earnings cannot exceed $110,000 per year ($220,000 if married and filing jointly) for any single tax year. You must also contribute regularly. These rules apply regardless of whether you are contributing directly to your paychecks or through your employer.
You can use a precious-metals IRA to purchase gold, silver and palladium. You can only purchase bullion in physical form. This means you won’t be able to trade stocks and bonds.
You can also use your precious metals IRA to invest directly in companies that deal in precious metals. This option is available from some IRA providers.
There are two main drawbacks to investing through an IRA in precious metallics. First, they're not as liquid as stocks or bonds. It's also more difficult to sell them when they are needed. Second, they don’t produce dividends like stocks or bonds. Also, they don't generate dividends like stocks and bonds. You will eventually lose money rather than make it.
What is a Precious Metal IRA?
A precious metal IRA allows you to diversify your retirement savings into gold, silver, platinum, palladium, rhodium, iridium, osmium, and other rare metals. These precious metals are extremely rare and valuable. These metals are great investments and can help protect your financial future from economic instability and inflation.
Precious metals often refer to themselves as “bullion.” Bullion refers to the actual physical metal itself.
Bullion can be purchased through many channels including online retailers and large coin dealers as well as some grocery stores.
A precious metal IRA lets you invest in bullion direct, instead of purchasing stock. This means you'll receive dividends every year.
Precious Metal IRAs don’t require paperwork nor have annual fees. You pay only a small percentage of your gains tax. You also have unlimited access to your funds whenever and wherever you wish.
How much should you have of gold in your portfolio
The amount of capital that you require will determine how much money you can make. If you want to start small, then $5k-$10k would be great. As you grow, it is possible to rent desks or office space. Renting out desks and other equipment is a great way to save money on rent. Only one month's rent is required.
It is also important to decide what kind of business you want to run. My company is a website creator. We charge our clients about $1000-2000 per monthly depending on what they order. If you are doing this type of thing, it is important to think about how much you can expect from each client.
You won't get a monthly paycheck if you work freelance. This is because freelancers are paid. So you might only get paid once every 6 months or so.
So you need to decide what kind of income you want to generate before you know how much gold you will need.
I would recommend that you start with $1k-2k worth of gold and then increase your wealth.
Statistics
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
External Links
law.cornell.edu
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement funds
cftc.gov
wsj.com
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- You want to keep gold in your IRA at home? It's not exactly legal – WSJ
investopedia.com
How To
A growing trend: Gold IRAs
As investors look for ways to diversify their portfolios and protect themselves against inflation, the gold IRA trend is on the rise.
Owners of the gold IRA can use it to invest in physical bars and bullion gold. It can be used as a tax-free way to grow and it is an alternative investment option for people who are not comfortable with stocks or bonds.
A gold IRA allows investors the freedom to manage their wealth without worrying about volatility in the markets. Investors can use the gold IRA for protection against inflation and potential problems.
Investors also enjoy the benefits of owning physical gold, which includes its unique properties such as durability, portability, and divisibility.
Additional benefits of the gold IRA include the ability to quickly pass ownership to heirs. Additionally, the IRS does not consider gold a money or a commodity.
Investors who seek financial stability and a safe haven are finding the gold IRA increasingly attractive.
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By: Jamie Redman
Title: The Digital Gold: Bitcoin as a Store of Value, According to Bona Fide Wealth President
Sourced From: news.bitcoin.com/bona-fide-wealth-president-defines-bitcoin-as-digital-gold-discusses-showdown-between-crypto-natives-and-traditional-finance/
Published Date: Tue, 30 Jan 2024 22:30:30 +0000
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