Everyday in the news we hear how cryptocurrency is a bubble and how this or that top investment advisor hates Bitcoin. Most banks and investment advisors have issued warnings against Bitcoin. But, let’s stop and think about why these investment gurus hate Bitcoin.
For example, Forbes issued the following dire warning on November 7, 2017: Beware Of The Bitcoin Bubble: Investment And Financial Advisors Warn
“Investment strategists and financial advisors warn Bitcoin is another bubble akin to the tech boom of the late 1990s to early 2000s, the housing crash of 2006-2007 and the commodities bust of 2008-2009…”
“A month before the 1987 crash, my cab driver said he started day trading,” said Scott Kelly, CEO of Black Dog Venture Partners in Phoenix, Ariz. “A month before the real estate crash in 2007 in Arizona, my cab driver said he was getting into flipping real estate. Last week, my Uber driver said he just started trading Bitcoin.”
“The brightest minds in business and economics are shouting from rooftops that Bitcoin is in a bubble: Mark Cuban, Warren Buffet, Robert Shiller, Jamie Dimon.
“But it is anybody’s guess what inning. It looks to me like we’re well ahead of the 7th-inning stretch,” said Jason R. Escamilla, CEO of ImpactAdvisor, an investment advisory firm in San Francisco. “The price level and energy usage are unsustainable. There is far better technology emerging to meet the same needs.”
You can find these dire warnings all over the web. It seems every investment advisor just hates Bitcoin. Have you ever stopped to think why?
Bitcoin and cryptocurrency investing allows you to move your money out of the stock market and invest without the assistance of an investment advisor. You can trade (basically) free, without paying any commissions. What do you need an investment advisor for?
Remember that even stock brokerage trading accounts are making money on each and every transaction. And IRA trading accounts are usually providing you access to only those investment options that they make the best fees… not necessarily the best investments for you, but certainly the best products for their bottom line.
And these fees eat at your investment returns. From the SEC website, if you were to invest $100,000 over 20 years with a 4% return and just a 1% fee, you would have about $180,000 at the end of the period. If you invested with only a .25% fee, you would have about $210,000 at the end of 20 years.
Top hedge funds often charge a lot more than 1%. Historically, the fee structure for top funds was 2/20. The manager gets 2% of assets under management plus 20% of the performance. Sometimes this performance fee was after a hurdle rate (minimum return based on LIBOR or some other index).
For 2017, the average fee was about 1.65% to management and 18% in incentive fees. For new fund launches, it was 1.49% and 17.5% according to Hedge Fund Research. In any event, the fees for US funds is high compared to the low or no cost trades in crypto.
So, investment advisors hate bitcoin because they can’t make any money on it. Adding insult to injury, Bitcoin’s rise has caused investors to pull money from poorly performing positions with over paid advisors and trade it themselves online.
In fact, Bitcoin and cryptocurrency can be traded anywhere, anytime, and from any country. There’s no reason you need to leave your coins in the United States. You can move then anywhere with the push of a button.
And the same goes for IRAs and retirement accounts. You can get them away from investment advisors and trade them yourself in the US or offshore.
A crypto IRA in the US is traded through a self directed account. Move your retirement dollars away from Scottrade, Vanguard, or Charles Schwab and into a custodian that allows for self directed accounts.
If you want to hold your retirement account offshore, you need to first setup an offshore IRA LLC. Then your self directed custodian invests your savings into that LLC and you take it from there. You’re the signer on the LLC bank account and the “investment advisor” trading your own account through that structure.
You’ll always need a US custodian, even with all your IRA money out of the US. Most custodians charge a fixed fee of $250 per account to act as your custodian. They don’t make any money from your trades and have no control over your bank account or wallet.
You can also take your savings offshore and trade crypto in an international wallet. For smaller accounts, you might open the wallet in your name. More advanced users seeking asset protection should form an offshore company or an international trust.
I hope you’ve found this post on why investment advisors hate Bitcoin helpful. For more on how to structure your affairs offshore, or to move your retirement account abroad, you can contact me at info@premieroffshore.com or call us at (619) 550-2743. All consultations are free and confidential.
