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IRA LLC Success Story: Bitcoin Confidence Paid Off

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Finding an alternative asset to invest in after establishing your Self-Directed IRA is one thing. Having the unassailable confidence to then go ahead and invest your precious retirement money in it is another.

But how about putting $822,800 into a digital, intangible currency instead of investing more conservatively in the stock market? Most would say a person who did that is reckless or downright foolish.

Joe Garrett would simply say he was confident in his research.

Back in March 2015, Joe came across the white paper of Satoshi Nakamoto, the alias of the mysterious and still unidentified creator(s) of Bitcoin. Presently the most popular cryptocurrency on the market, bitcoin was still at least 36 months away from its myth-making explosion in price that solidified its place in the public consciousness. Back then, it was just starting to gain steam outside the tech world as a legitimately intriguing innovation. However, widespread awareness and acceptance of its credibility was nothing but a pipe dream at this point.

confidence

After reading Nakamoto’s white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System, Joe almost immediately became obsessed with its potential and, soon enough, convinced of its future profitability. It became “clear as day” to Joe that Bitcoin’s “disruptive” peer-to-peer payment systems were going to become essential to the existing financial structure. A man of strong convictions, Joe decided he must capitalize on his findings.

Less than a month after reading the Bitcoin white paper, Joe decided on Broad Financial as the vehicle with which he would invest in Bitcoin. He set up an IRA LLC, or a Self-Directed IRA with Checkbook Control, that allowed him to freely buy and sell Bitcoin at his discretion without intervention or approval needed from a custodian.

With the power and autonomy to make all his own decisions on investments, Joe dove head-first into the Bitcoin waters. His first 2 investments with his Broad Financial IRA were as follows:

  1. Purchased 1000 Bitcoin @ $257/each in April 2015
  2. Purchased 30,000 shares of Coinbase stock @ $18.86/share in November 2015

If you have since followed the rise of Bitcoin, especially in 2017, then you know how prudent Joe’s investment truly was. If you’re not quite sure, let’s do some quick math here.

The April 2015 investment in the actual Bitcoin alone cost Joe $257,000. Assuming he still only has those original 1000 coins, Joe’s April 2015 investment would now be valued at $8,104,730 (using Bitcoin’s listed price of $8,104.73 as of 1/7/20), a truly incredible 31.5x his initial investment.

And that’s only the Bitcoin.

Coinbase is a privately traded company, so we can not figure out exactly what a share in the company is currently valued at. That being said, with Coinbase being among the most popular cryptocurrency exchange sites out there, we can assume it is a great deal larger than the average price of $18.86 at which he bought his 30,000 shares over 4 years ago.

At this point, Bitcoin optimism is still quite strong despite its price not quite reaching the towering highs of late 2017. Depending on whose opinion you seek out, more often than not you will find projections for bitcoin to continue to grow in relevance, ubiquity, and therefore, value.

confidence

Now, this is obviously an extraordinary case of how powerful a tool a Self-Directed IRA can be. The returns investors received from getting in early on Bitcoin is purely the result of a once-in-a-generation opportunity, one that you simply can’t expect to come again.

What is extremely attainable, however, is the confidence Joe had in making the initial investment despite the readily apparent risks. In early 2015, Bitcoin was considered a scam by many, including countless intelligent and experienced investors. Despite the warning signs, Joe believed in his research and his ability to spot a great investment.

The investment YOU are most interested in may not make you an overnight millionaire like bitcoin did for Joe, or maybe it will. The opportunities are nearly limitless when investing in a Self-Directed IRA. The one component of Joe’s investment that you can absolutely replicate is the necessary research and preparation to ensure your confidence in your decisions. Whether you are buying a rental property or private business in your IRA, the same principles on how to properly educate yourself apply. Also, it is almost certainly less risky than Joe’s pre-boom plunge into Bitcoin.

If you do your homework on your preferred investment, and develop a strong enough conviction of its viability, there’s no telling how much it could benefit your retirement. Trusting in yourself when you’ve put in all the work makes pulling the trigger on a potentially life-changing investment that much easier.

Just ask Joe, and remember you’re most likely not putting up $822,800 on intangible money that almost no one has heard of.

If you could ask Joe, however, he would almost certainly tell you that it was his confidence in bitcoin fostered by diligent research that allowed him to make the investment decisions that he did.

In fact, I’m very *confident* he would say just that.

2020-01-31T10:17:17-04:00 January 31st, 2020|Uncategorized|

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