How to Choose a Digital IRA Custodian

No matter where you look, it is likely that you will find someone talking about cryptocurrencies and the opportunity to now open a digital IRA. Doing so means having a self directed investment fund and you need to find a historian that is happy to deal with this.  Before you decide to roll your existing IRA over into a self directed IRA, there are a couple of issues that you need to consider.


Thinking about a Digital IRA?


Investing for your retirement is important. That is a given. However, how to invest for your retirement is not a given. The traditional method will be to find a custodian who provides advice on different investment options and even makes those decisions for you. Within digital IRA, you will be making personal decisions because it is fully self-directed. This means you have to understand the risks involved and whether you can cope with those, when you want to retire, how much you need to save for your retirement, and so on.


Of course, the self directed IRA is not actually anything new. What is new is the digital IRA. What is also new is the state of the economy. 40 years ago, when self-directed IRA first became available, anybody could understand the financial markets because the patterns were highly predictable. Today, this has completely changed. The .com era changed everything, making people think that they could invest in just about anything electronic or internet related and watch their investment skyrocket. But even this didn’t last.  There are always circumstances beyond control. The subprime mortgage scandal, corporate accounting scandals, 9-11, these are all things that had a huge impact on the financial market and saw self directed IRAs lose virtually all their value overnight. But it now seems that the digital IRA will be able to help recover from this.


Finding a Digital IRA Custodian


Because the digital IRA is still quite new, finding a custodian can be somewhat difficult. You will have to research all your different options and consider the pros and cons of each of those. Some options to consider include:


  1.  A major brokerage company or bank. They tend to be semi self directed, giving you a list of investment options to choose from but not complete freedom. This lack of freedom can be somewhat restrictive but it also means that these accounts are less risky. It is up to you to determine just how diverse you want your portfolio to be and whether it is possible to do this with a traditional custodian.
  2.  Going to a true custodian, being an individual or a company that does not limit or offer any investments. Rather, they charge you for having an account with them, for maintaining the account, and for your investment activities. The benefit of this means that you can quite literally invest in anything you like, within IRS rulings, but it can be expensive and very risky.


Choose wisely and do your research!

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