Fidelity Crypto IRA vs traditional Fidelity IRA. Here are the pros and cons

00:01 Hey everyone, let's talk about investing 00:03 retirement funds in Bitcoin and the 00:06 different options you have to do that. 00:08 First of all, most retirement accounts 00:09 will allow you to invest in Bitcoin as 00:12 long as you are not uh you do not have 00:14 that account with your current employer. 00:16 So, the one exception that typically 00:18 will not allow you to invest in Bitcoin 00:21 is if your current employer, whether 00:23 it's a 401k or a 403b, 00:26 uh your current employer typically is 00:28 not going to let you invest in Bitcoin 00:30 because they do not want the liability 00:32 of the volatility. Meaning, you put 00:35 money in Bitcoin, it happens to go down 00:36 the next day. They don't want you 00:38 knocking on the door of the HR 00:40 department saying my Bitcoin went down 00:42 in retirement funds, you know, it's your 00:44 problem, etc., etc. So most companies 00:46 will not allow you to invest the 401k or 00:50 403b in Bitcoin because for the same 00:53 reason they will not allow you to invest 00:54 in individual stocks. You cannot take 00:57 your company 401k typically and invest 00:60 all of it in Microsoft or Google or 01:02 Amazon or Facebook or uh you know Tesla 01:06 or Nvidia or anything like that. They 01:08 just won't let you do that. They want 01:09 you to put it in some very diversified 01:12 comparatively safe option even if that 01:15 has lower economic return because again 01:18 it they just feel like that's a safer 01:19 way of making sure that you're not going 01:21 to knock on their door and say hey you 01:23 know something went wrong. Okay. So 01:26 which means if you have retirement funds 01:29 that are not with your current employer 01:31 they can still be in a 401k. They just 01:33 can't be in a 401k with your current 01:35 employer. uh meaning if you have an old 01:37 401k, you can typically invest those in 01:39 Bitcoin. Okay. So, how do you do that? 01:41 You do that through either an IRA, an 01:44 individual retirement account, or a Roth 01:46 IRA, which is much superior from a tax 01:49 perspective, or through what's called a 01:51 rollover IRA. A rollover IRA, it 01:55 typically gets that way because it 01:57 rolled over from a 401k plan or a 403b 02:01 plan or something like that. So, if you 02:04 have an old 401k plan from a previous 02:07 employer that is not your current 02:08 employer, you can probably almost 02:11 certainly roll that 401k into a rollover 02:15 IRA at Fidelity. And that rollover IRA 02:18 at Fidelity will allow you to invest in 02:20 Bitcoin. And there's two ways to do that 02:22 and we'll talk about that. Okay. Your 02:24 other option if you have an existing IRA 02:28 is to roll that into Fidelity. And if 02:30 it's an IRA, it stays an IRA. If it's a 02:32 Roth IRA, it stays a Roth IRA. So the 02:35 the one that tends to sort of change 02:38 names and change sort of function or 02:41 maybe not function, but it changes uh 02:43 sort of it looks different on piece of 02:44 paper is when you roll a 401k into a 02:48 rollover IRA. All right. So if you do 02:50 with that with Fidelity, you have two 02:52 options, and I'm going to walk through 02:53 the pros and cons of each of those. The 02:56 first is to roll over to a traditional 02:59 IRA, Roth IRA, or rollover IRA with 03:02 Fidelity. The benefits of rolling over 03:04 to a traditional IRA, and I'm going to 03:07 call it a traditional IRA, but if I say 03:09 traditional IRA, I mean traditional IRA 03:12 or Roth IRA or rollover IRA. So, if I 03:15 say traditional IRA, what I mean is it 03:17 could be a traditional IRA, it could be 03:20 a Roth IRA, could be a rollover IRA. 03:23 Same if I say a Fidelity crypto IRA, it 03:26 means could be a Fidelity crypto IRA, 03:29 Fidelity crypto Roth IRA or Fidelity 03:32 crypto uh rollover IRA. So okay, so the 03:36 benefit of a traditional approach is uh 03:39 on Fidelity is flexibility. Uh if you 03:42 want to invest in Bitcoin in a 03:43 traditional IRA on Fidelity, uh you have 03:46 to invest in a Bitcoin ETF, 03:48 exchangeraded fund. And the reason for 03:50 that is because a traditional IRA 03:54 doesn't normally hold Bitcoin in it 03:56 directly. And so you have to hold 03:58 something that holds Bitcoin. And the 04:00 thing you hold that holds Bitcoin is 04:02 called a Bitcoin ETF, exchangeraded 04:04 fund. The two largest ETFs for Bitcoin 04:07 ETFs are IBIT, IBIT, which is run by 04:10 BlackRock, although you can hold uh that 04:13 one on any platform, not just Black 04:15 Rockck. Uh so you can hold BlackRock's 04:16 Bitcoin ETF on Fidelity and vice versa. 04:19 The other big one is Fidelity, which is 04:21 FBTC. F is in Foxtrot, also Fidelity. F 04:25 is in Fidelity. BTC as in the the three 04:28 letters that represent Bitcoin, FBTC. 04:31 So, if you have a traditional Fidelity 04:34 uh uh retirement fund, a traditional 04:37 IRA, you can invest in Bitcoin with a 04:39 Bitcoin ETF. Uh I recommend FBTC because 04:43 it's just Fidelity. It keeps it all 04:44 Fidelity on the Fidelity platform. Also, 04:47 Fidelity custodies the Bitcoin 04:48 themselves, whereas Black Rockck 04:51 outsources custody to Coinbase and 04:53 others, which means you're just trusting 04:54 more companies. So, with Fidelity, you 04:56 only are trusting Fidelity. uh if you 04:59 use IBIT IBIT which is the eyesshares 05:03 Bitcoin bit Ibit from BlackRock then if 05:06 something goes wrong you know I just 05:08 don't want Black Rockck saying it's 05:10 Coinbase's fault and Coinbase saying 05:11 it's Black Rockck's fault and you know 05:13 it's just cleaner at Fidelity because 05:15 it's all Fidelity so there's no 05:17 fingerpointing it's just Fidelity. Uh 05:19 anyway, so I I use FBTC or I did use 05:22 FBTC until Fidelity came out with their 05:25 crypto IAS and I'll explain what those 05:28 are. So anyway, the the benefit of a 05:29 traditional uh Fidelity IRA is you can 05:32 invested in Bitcoin with a Bitcoin ETF. 05:34 Um the downside well and the upside is 05:37 if you decide you want to invest in 05:38 other things, you can. You can invest in 05:40 other stocks and bonds and funds and 05:43 ETFs and whatever else. So you have 05:44 flexibility. The benefit of the um 05:48 traditional approach is the flexibility. 05:50 Now there is a downside with that one. 05:52 It's a bit more complicated because 05:54 instead of d uh investing in Bitcoin 05:55 directly, you're investing at a Bitcoin 05:57 ETF and so you have to keep track of 05:60 like I'm buying a certain number of 06:01 shares and those shares represent 06:03 Bitcoin. But then on the platform, you 06:05 got to run a bunch of complicated math 06:07 to figure out how much Bitcoin you 06:09 actually own. So if you own a thousand 06:11 shares of FBTC, the question is how much 06:13 Bitcoin is does that represent? And you 06:15 can go to online calculators and find 06:17 out. It's just you have to jump through 06:19 hoops to figure out what is 1,00 shares 06:21 of FBTC. Well, how much Bitcoin does 06:23 that really represent? Okay, the other 06:25 alternative. So, the traditional 06:27 approach, the benefit is the 06:28 flexibility. Uh the downside is it's 06:30 complicated to figure out how much 06:31 Bitcoin you actually own. And because it 06:34 is a in a traditional IRA, it only 06:37 trades when the stock market trades. 06:38 That means it's only available to buy or 06:41 sell 19% of the time. So, the stock 06:43 market, which is open from 8:30 a.m. to 06:46 3:00 p.m. Central time, although 06:49 everybody sort of quotes the hours in 06:51 Eastern time, which means it's open from 06:53 9:30 to 4:00, but if you translate that 06:56 to central time, it's 8:30 to 3. So, a 06:59 uh that is when the stock market trades. 07:01 So, if you add up the entire stock 07:04 market hours in a week, it's about 19% 07:07 of the time. And again, the reason is 07:09 it's not trading uh on the evenings. 07:11 It's not trading on the weekends. So, 07:13 six and a half hours a day, times five 07:16 days a week, and then you back out, you 07:17 know, Christmas, New Year, and a bunch 07:19 of uh Thanksgiving, and a bunch of 07:20 holidays, it's only open 19% of the 07:23 time, which means for a traditional IRA, 07:26 you can only buy and sell things that 07:28 are in it. Whether it's bit a Bitcoin 07:30 ETF or Tesla or Amazon or anything else, 07:33 you can only buy or sell 19% of the 07:35 time. Which means if it's 10 p.m. on a 07:37 Saturday or 10 p.m. on a Friday night 07:40 and you decide you want to sell some 07:41 Bitcoin, that Bitcoin will not sell 07:44 until 8:30 a.m. Central time on Monday 07:46 morning. If it's Memorial Day, Labor 07:48 Day, whatever, you know, if if the 07:50 markets are closed on Monday, then 07:52 you're not going to get to sell your 07:53 Bitcoin till Tuesday morning. That's a 07:55 long time to wait in my opinion. Okay. 07:58 So, as a result of those downsides, the 08:00 downside being that the Bitcoin had to 08:02 be held in a Bitcoin ETF and that you 08:06 could only trade it 19% of the time and 08:08 that it's kind of complicated to figure 08:09 out how much exact amount of Bitcoin you 08:11 own. Uh, Fidelity came out with a 08:14 Fidelity crypto IRA. So, what is what is 08:17 a Fidelity crypto IRA? Well, it has the 08:19 word crypto in it, which means unlike a 08:21 traditional Fidelity IRA, it can 08:23 directly own Bitcoin. Now, they will 08:26 also let you own, I think, Ethereum and 08:28 Litecoin, but basically the other two or 08:30 three things you're allowed to own in a 08:32 Fidelity crypto IRA are not worth 08:34 owning. The only thing you should put 08:37 money in is Bitcoin. Now, again, they 08:40 don't make you put it in the other 08:41 things. They just allow you to put it in 08:43 the other things. So, but it's super 08:45 simple with a Fidelity Crypto IRA. Uh, 08:48 you just buy Bitcoin. I mean, it asks 08:50 you what you want to buy. It gives you 08:51 like three or four options and you just 08:53 pick Bitcoin and it lets you buy Bitcoin 08:55 and it's super easy to tell how much 08:57 Bitcoin you have because 08:60 uh it actually says the amount. So it'll 09:02 say instead of saying you have a 09:03 thousand shares of FBTC, it'll say you 09:06 have 0.1 Bitcoin. I mean it'll like just 09:08 tell you an exact amount of Bitcoin and 09:10 you can actually know how much Bitcoin 09:12 you have. So there's a there's a benefit 09:14 to that. Also, Fidelity Crypto trades 09:17 24/7. So, if you want to liquidate or 09:20 buy or sell Bitcoin anytime, day or 09:21 night, year round, you can do that on a 09:23 Fidelity crypto IRA and you cannot do 09:26 that on a traditional Fidelity IRA. So, 09:30 what are the downsides of a Fidelity? 09:32 So, first of all, between the two, I 09:34 would always recommend a Fidelity crypto 09:36 IRA because I think the extra trading 09:39 hours, the extra simplicity and all of 09:41 that and the direct ownership are worth 09:43 the trade-offs. Now the downside is if 09:45 at some point in the future you have 09:47 funds in a Fidelity crypto IRA and you 09:50 decide you want to not invest them in 09:52 Bitcoin. Obviously you can you know cash 09:55 it out to US dollars or something like 09:56 that but a Fidelity crypto IRA is 09:59 specific to crypto which means you 10:02 cannot sell Bitcoin and buy uh Tesla or 10:06 Amazon or Apple or you know those sorts 10:08 of stocks. Uh so what you are the 10:10 benefit you're getting with a Fidelity 10:12 crypto IRA is direct ownership of 10:16 Bitcoin instead of ownership through a 10:18 Bitcoin exchange traded fund ETF. So 10:22 you're get you're getting the benefits 10:23 of direct ownership which makes it super 10:25 simple and straightforward to understand 10:27 and and see how much Bitcoin you're 10:29 owning. Uh you also have the benefit of 10:34 uh being able to trade it 247. But the 10:36 downside is again if you want to sell 10:40 the Bitcoin and buy something else uh in 10:43 the stock market you can't because of 10:44 Fidelity crypto you can only buy crypto 10:46 with it. Now in my case that's not a 10:48 downside because there's nothing in the 10:50 stock market I want to buy. So, I have, 10:52 for example, 100% of my retirement in 10:55 Bitcoin, and it is in a Fidelity crypto 10:58 IRA. And it got that way because I had a 11:00 401k from Bombgar Corporation that uh I 11:04 accumulated between uh 2003 and 2014 11:08 when I sold Bombgard Corporation. So, in 11:11 that 11 years, I had a 401k. Well, I my 11:15 good friend Lee uh recommended or made 11:19 me aware that I could roll over that old 11:21 401k 11:22 to a Fidelity account and buy Bitcoin 11:24 with it, which at the time, this was a 11:26 year ago, I did not realize was 11:28 possible. I mean, as much as I know 11:29 about Bitcoin, I had just never 11:31 researched it. I assumed it was 11:32 complicated. Uh it turns out it's very 11:34 straightforward. It's like two clicks 11:36 and it's super simple. And so as a 11:38 result, last year almost exactly one 11:39 year ago, I put the entire balance in 11:42 that old 401k. I moved it over to uh at 11:46 the time a traditional IRA because 11:48 Fidelity did not have their crypto IRA. 11:50 As soon as they rolled out the crypto 11:51 IRA, I moved it to that. Uh but anyway, 11:53 I put 100% of that 401k in Bitcoin at a 11:56 Bitcoin price of 57,300. 11:59 So if you double 57,000, you end up with 12:01 114,000. And so over the last 12 months 12:05 that uh my old 401k that accumulated 12:08 over 12 years and had been very very 12:11 slowly growing over the last 11 years. 12:14 So basically I accumulated that over 11 12:16 years and it has been growing very 12:18 slowly over the last 11 years. So there 12:21 was certainly more in there than I 12:22 started with but not that much more. And 12:24 just in the last 12 months that has 12:25 doubled. It's gone from 57,000 12:28 to more than 118,000. 12:31 So more than doubled. So, I have a 12:33 Fidelity crypto IRA. I do not envision 12:36 wanting to put that in anything other 12:39 than Bitcoin, and I value direct 12:41 ownership of Bitcoin. The flexibility to 12:44 buy or sell anytime I want, even though 12:46 I have no reason to sell, so it's only 12:48 ever buying. Uh so anyway, so I 12:50 recommend the Fidelity Crypto IRA 12:53 whether you're doing an IRA or a Roth 12:56 IRA or a 401k uh which you would roll 12:59 over to a rollover IRA. Regardless, as 13:03 long as you want to put 100% of the 13:04 proceeds of what you're doing in 13:06 Bitcoin, a Fidelity crypto IRA is 13:09 definitely the way to do that. Uh if 13:11 you're not comfortable putting 100% 13:12 over, you can. I think I don't know this 13:15 but I think you can roll part of an IRA 13:18 or part of a uh you know 401k. I think 13:21 you can roll part of it over. Um but 13:23 alternatively you can roll it over into 13:26 a traditional 13:27 Fidelity IRA and then just move a 13:29 portion of the funds over uh to because 13:32 they're all in, you know, tax advantage 13:34 retirement accounts. I can roll it over. 13:36 So in my case, the Fidelity crypto IRA 13:38 did not exist when I did the rollover a 13:41 year ago because they launched it like 13:42 back in whenever they launched it. They 13:45 launched it in the last 12 months. Um so 13:47 it did not exist when I did that 13:49 rollover. Um as a result of that um I 13:52 rolled it into a traditional account and 13:54 then when they launched Fidelity Crypto 13:56 I rolled it from that account into the 13:59 Fidelity Crypto account and I think in 14:01 order to do that I think I had to sell 14:03 the FBTC shares. Yes, now I'm 14:05 remembering I had to sell the FBTC 14:07 shares, transfer the funds between a 14:10 traditional Fidelity IRA rollover IRA to 14:13 a Fidelity crypto rollover IRA and then 14:17 uh buy the Bitcoin with it. So, it was a 14:19 little bit of an ordeal because I was 14:21 selling all of the FBTC and buying 14:24 Bitcoin. Now, if you're rolling over an 14:26 IRA or a Roth IRA or a 401k into a 14:29 rollover IRA, you could do that straight 14:31 into Fidelity Crypto and you would not 14:33 have the problem I had, which is that I 14:35 rolled it into a well, it's not a 14:37 problem. It just created in an extra 14:39 step. I rolled it into a traditional IRA 14:41 first and then bought FBTC with it, left 14:45 it that way for months until they came 14:47 out with Fidelity Crypto IRA and then I 14:49 sold the FBTC shares, moved the money 14:51 over to the IRA and bought Bitcoin with 14:55 it, the sorry, Fidelity crypto IRA. So 14:57 anyway, to summarize a traditional, so 15:00 basically one of the best ways to own 15:02 Bitcoin is in a retirement account. Um, 15:05 the most common ways to do that are a 15:07 IRA, a Roth IRA, or a rollover IRA, 15:10 which means it came from a 401k or I 15:13 think a 403b, but it definitely could 15:15 come from a 401k and turn into a 15:18 rollover IRA. So, that is a great way to 15:20 own Bitcoin. And my recommendation, 15:23 again, if you don't need the flexibility 15:25 of investing in other random stuff, 15:27 which I do not because I only want to be 15:28 invested in Bitcoin, um the best way to 15:31 do that is to roll it over to a Fidelity 15:34 crypto IRA. And if you have a 15:36 traditional IRA, it would roll to a uh 15:38 Fidelity crypto IRA. If you have a Roth 15:40 IRA, it would roll to a Fidelity uh 15:44 crypto Roth IRA. And if you have a 401k, 15:46 it would roll over to a Fidelity crypto 15:49 rollover IRA. Or if you used to have a 15:52 401k and you already rolled it over into 15:54 an IRA, so it's already a rollover IRA, 15:57 then you would just be rolling it over 15:59 from wherever it is from a traditional 16:02 rollover IRA to a Fidelity crypto 16:05 rollover IRA. I know that's a lot of 16:07 moving parts. I know it's complicated. 16:09 It's actually super easy to do and I can 16:12 speak from personal experience that my 16:14 entire retirement fund has doubled in 16:16 value over the last 12 months because I 16:18 did that 12 months ago. So, if you have 16:20 any questions, let me know. Uh, I love 16:23 the Fidelity crypto IRA product. I think 16:26 it's fantastic. I love that you can own 16:28 directly Bitcoin with it. I love that it 16:31 trades 24/7. I love that it's super easy 16:33 to know how much Bitcoin you actually 16:35 own because it shows you that rather 16:37 than just how many shares of a Bitcoin 16:39 ETF you own and then you have to figure 16:41 that out, which is a pain. Um, but 16:43 anyway, so I definitely recommend the 16:46 Fidelity Crypto IRA. It's worked great 16:49 for me and for others who have done the 16:51 same thing. And so that's my 16:52 recommendation for this evening. Have a 16:54 good one, everyone. Thanks.