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.