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Over the past year, interest in cryptocurrencies has become more widespread, with the price of Bitcoin, the largest by market capitalization, rising to a record high in April.

With all the hype, you might be wondering if it is possible – and worthwhile – to invest in cryptocurrency for retirement, specifically in your individual retirement account, or IRA.

It is possible through a self-directed IRA, which can be used to hold alternative investments not normally permitted in a traditional IRA, such as real estate or commodities. However, experts generally caution against this.

Here’s why you should avoid investing in cryptocurrency for retirement.

‘The costs can be great’

One of the reasons experts warn against investing in cryptocurrencies with a self-directed IRA is that it is not widely available and does not make sense for most investors. In general, it can be risky and expensive, even without cryptocurrency holdings.

There are also strict rules in place from the Internal Revenue Service regarding prohibited investments in IRAs. With a self-directed IRA, you can manage all the investments yourself, so you’re personally in trouble if any rules are broken.

“Self-directing IRAs typically require a professional or trustee and costs can be significant due to additional compliance and IRA requirements,” Anjali Gariwala, certified financial planner, certified public accountant and founder of Fit Advisors, tells CNBC Make It. “[I]If you fail to adhere to all the rules, your account may lose tax-deferred status. “

There is also the potential for fraud, as the Securities and Exchange Commission has previously warned. “While a broader range of investment options may be attractive, investors should be aware that investments in self-directed IRAs increase risks, including fraudulent schemes, high fees, and volatile performance,” the Securities and Exchange Commission wrote in 2018.

“I would be really interested in someone’s decision to move forward,” says Jariwala.

Cryptocurrencies have their own risks

In addition to the risks of a self-directed IRA, Jariwala cautions against investing retirement funds in cryptocurrencies specifically, given their volatile and speculative nature.

Cryptocurrency investors generally need to be comfortable with extreme price fluctuations and may lose their entire investment. For this reason, crypto may not be the best option in a retirement wallet. It may make sense for it to be a relatively small portion of your overall portfolio because it can significantly increase your portfolio’s risk profile and potential withdrawals.

“I believe in diversification and the best IRA investment in the markets,” says Jariwala. “if [an investor has] Additional cash or deposited in a brokerage account, which can be used for more speculative investments such as bitcoin, but I will not try to find a way to invest retirement money.”

It is also important to consider the possibility of additional regulation of cryptocurrencies before adding them to a self-directed IRA.

“Cryptocurrency is currently seen as a property, but if the IRS changes the asset type, it may become one that cannot be held in a self-directed IRA,” says Jariwala. If that happens, “you may be stuck and forced to liquidate at an inopportune time or have severe tax problems.”

If you still want to invest in cryptocurrency, despite the risks, try starting with an amount that you can afford to lose outside of your retirement savings. Allocating a smaller portion of your overall portfolio can help hedge risk, while also giving you exposure to crypto assets.

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