09 June 2014 / Market Watch – Before 2008, alternative investments were discussed strictly as an investment option with “ accredited investors ,” or those who have over $1 million of assets (exclusive of their home) and an income requirement (has made at least $200,000 for each of the last two years). This was to define the investor who was willing to accept the lack of transparency inherent in most of these investments, and (perhaps more important) could absorb a potential full loss of their investment in these highly risky investments.
Much of this changed after 2008, when investors were searching for investments that had little to no correlation to market swings. Advisors were also anxious to find investment vehicles for investors, who were now no longer enamored with stocks and bonds.
Currently, the “average” investor can add “alternative investments” as a small part of their investment portfolio through investments in exchange-traded funds ( notice how many ETFs have been created since 2008 ?) that invest in REITs and commodities. These “liquid” alternatives gives the average investor the ability to gain more access to “hedge fund type” managers and investment styles then they had in the past, when it was primarily reserved for the wealthy investor.
As discussed in my last two articles in this series, I believe that an investment in bitcoins can, and should, be considered an alternative investment. And as such, I’d like to make an investment in them to fit into my asset allocation “category” of 5%-10% within my retirement account. These articles have examined my journey thus far to meet that “goal” and at this point, I’ve discovered:
- A method for buying bitcoins in a qualified investment account doesn’t currently exist. Sure, you can “designate” a non-retirement, investment account for this purpose and buy individual bitcoins but you can’t do this in a qualified retirement account. To see a person who took this route and their experience, click here .
- Bitcoin investment vehicles for the “average investor” such as an ETF investing in bitcoins, which is being touted by the Winklevoss twins , aren’t currently available and will require approval by the SEC, which could be a lengthy process .
- The only current method for making a bitcoin investment in your retirement account is to have a ” self-directed” retirement account and be an accredited investor. The options for the investments to be made in this type of account are limited.
I’ve researched the few available investment options and have gone through the process of setting up the “self-directed” retirement account. I’ve also filled out the necessary, and lengthy, paperwork that acknowledges that I’m an accredited investor and have decided that I’ll be making the minimum investment into something called the Bitcoin Investment Trust (BIT) and placing that into my retirement account.
The Bitcoin Investment Trust is a private, open-ended trust that invests solely in bitcoins. What that means is that it’s an investment that is not currently available through an open market or traded on an exchange, but must be subscribed to through a private placement memorandum and exclusively by accredited investors. The disclaimer information for the investment should be enough to frighten away the most prudent investor: “The BIT is a private, unregistered investment vehicle and NOT subject to the same regulatory requirements as exchange-traded funds or mutual funds, including the requirement to provide certain periodic and standardized pricing and valuation information to investors. There are substantial risks in investing in the BIT.”….. Read more
http://www.marketwatch.com/story/how-to-get-bitcoins-into-your-retirement-account-2014-06-09
