Transferring entire 500k taxable account to Bitcoin?

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bigguy8437
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Transferring entire 500k taxable account to Bitcoin?

Post by bigguy8437 »

Long story short, I’m 28 and been a boglehead since I was 21 (look back at my post history!). I’m a CPA myself, max out my Roth IRA, HSA (starting this year!) 401k every year. And as crazy as it sounds, I’m seriously considering selling all of my $550k in Vangaurd Total Stock Market (taxable account) to buy Bitcoin. I really do think it is the future and that I can at least 2x my investment (and likely more). I know this isn’t the forum or crowd for it, but how crazy does that sound? Am I taking a huge risk? If I bought Bitcoin, I’d buy it through coin base pro which seems to offer a lot of protection. I really do think Bitcoin can hit 500k in the next 20 years.

*fun fact, I actually bought $20 worth of Bitcoin in 2014. I never tried looking for it until 2018ish, buy the company I used, coinapult, went out of business and I haven’t been able to find anyone to contact to find my Bitcoin.

Lastly, if I live in MA and have an income of 100k, am I being taxed for long term capital gains tax at the 15% federal rate as well as the 5% state rate for MA? I really do believe in Bitcoin, but it really stomachs me to have to pay that much taxes on capital gains. Per vanguard, it looks like my long term capital gains are 287k, not really sure how much tax that calculates out to but doesn’t seem to be ideal

Age: 28
Taxable account: $552k (invested in vanguard total stock market)
Roth IRA: $87k (invested in same as above)
401k: $125k (also invested in same as above)
HSA: $800 (just started using this in 2021)
Total net worth: $765k, so I’d be putting about 70% of my net worth into Bitcoin
Last edited by bigguy8437 on Wed Mar 24, 2021 8:51 pm, edited 2 times in total.
Triple digit golfer
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Triple digit golfer »

What could go wrong?
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by abuss368 »

Wow! Not sure what to say.

Consider total market index investing instead of speculating.

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j9j
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by j9j »

Triple digit golfer wrote: Wed Mar 24, 2021 8:48 pm What could go wrong?
:D
lucha
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by lucha »

If you're willing to lose 500k, then OK. Just be prepared for that possibility.
Rlew
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Rlew »

I'm gonna grab some popcorn, and await the onslaught of comments :shock:
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000
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by 000 »

Well......

The expected long term real return of a currency is zero or less.

There may be future cryptocurrencies with more desirable features than bitcoin.

Your track record of keeping track of your bitcoin is poor....
Last edited by 000 on Wed Mar 24, 2021 8:54 pm, edited 1 time in total.
lostdog
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by lostdog »

:oops:
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JoMoney
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by JoMoney »

bigguy8437 wrote: Wed Mar 24, 2021 8:46 pm... And as crazy as it sounds ... how crazy does that sound? ...
On a scale of "not sounding crazy" to "sounding crazy", I think you're correct with your initial assessment that it sounds crazy.
I would go as far as saying it sounds crazy2 (cray cray)
Last edited by JoMoney on Wed Mar 24, 2021 8:55 pm, edited 1 time in total.
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slowandsteadywins
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by slowandsteadywins »

bigguy8437 wrote: Wed Mar 24, 2021 8:46 pm Am I taking a huge risk?
You don't know. I don't know. It's all a gamble. This is no different than trying to predict the future with any other investment. It is diametrically opposed to the entire logic behind what is known -- costs. We don't know the future of stock, bonds, or Bitcoins. There is a much longer track record of increased dividends in stocks, bond returns; no idea where Bitcoin would even land. What percentage of the market is Bitcoin? The answer to that is the amount I would even consider holding, and that's if it has very low to no costs of holding or investing in it over time.
bigguy8437 wrote: Wed Mar 24, 2021 8:46 pm Lastly, if I live in MA and have an income of 100k, am I being taxed for long term capital gains tax at the 15% federal rate as well as the 5% state rate for MA? I really do believe in Bitcoin, but it really stomachs me to have to pay that much taxes on capital gains. Per vanguard, it looks like my long term capital gains are 287k, not really sure how much tax that calculates out to but doesn’t seem to be ideal
Don't trust your stomach on Bitcoin or this. Use your mind and logic. You know you will encounter fees, taxes, and a loss by doing this. You may lose big, come out without a loss (break even), have some modest gains, more or less than if you stuck it out with what you have now. You have known risk, possibly more or less later, no one knows after the known risk of selling now.
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Actin
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Actin »

Do it OP

People on here said I was crazy for doing 100x leveraged long on Gamestop.

We'll prove them all wrong
runninginvestor
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by runninginvestor »

There's a very small chance that that if they went under or something, they could have turned it over to the state.
https://www.usa.gov/unclaimed-money

Highly unlikely with this kind of business (I'd assume) but an option to check. (Who knows maybe there's other unclaimed money of yours somewhere too)
MarkBarb
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by MarkBarb »

Sounds like a great idea. I wouldn't do it, but I can't think of any reasons why you shouldn't bet your life savings on bitcoin. I've always been a fan of owning stakes in income producing companies and interest bearing instruments from credit-worthy entities, but I can totally see why someone would want to speculate on virtual currencies whose value is hindered by the need to earn investment returns. Maybe it would be a little safer to own a basket of different cryptocurrencies, but that's the only objection imaginable.
renegade06
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by renegade06 »

I own Bitcoin, ETH and Cardano. I thin BTC is getting more acceptance and COULD really have a huge impact and be a store of value.

That said, I would NOT put all of your eggs in one basket. It’s important to diversify. If you are that passionate about BTC, maybe make it 20-30% of your portfolio... but I would not go much beyond that. Stock with TSM as a core part of your holdings. Worse case, if BTC went up big, you’d still make some great money from your holdings. But if Bitcoin crashes, then your wealth will crash with it
Kookaburra
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Kookaburra »

bigguy8437 wrote: Wed Mar 24, 2021 8:46 pm Long story short, I’m 28 and been a boglehead since I was 21.
Time to hand over your “Bogle card”.
wandering_aimlessly
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by wandering_aimlessly »

"been a boglehead since 21" - if going "all in" on bitcoin is your idea of being a boglehead you may want to check the definition...

As to what could go wrong - nothing possibly comes to mind... :oops:
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by livesoft »

"It's a bold strategy, Cotton. Let's see if it pays off ...."
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HomerJ
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by HomerJ »

bigguy8437 wrote: Wed Mar 24, 2021 8:46 pm Long story short, I’m 28 and been a boglehead since I was 21 (look back at my post history!). I’m a CPA myself, max out my Roth IRA, HSA (starting this year!) 401k every year. And as crazy as it sounds, I’m seriously considering selling all of my $550k in Vangaurd Total Stock Market (taxable account) to buy Bitcoin. I really do think it is the future and that I can at least 2x my investment (and likely more). I know this isn’t the forum or crowd for it, but how crazy does that sound? Am I taking a huge risk?
Of course, you sound crazy. Of course, you are taking a huge risk.

It may pay off. Good luck.

Now all that said, I would never hire you as my CPA. Make sure no one ever can trace your real name back to these posts.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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anon_investor
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by anon_investor »

So the OP wants to wait until Bitcoin is around $60k to do this? FOMO? The OP may have missed the boat?
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Doom&Gloom
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Doom&Gloom »

Seems like your second paragraph answers the questions in your first paragraph.

But I have no way of knowing what might happen. I wouldn't do it, but I've missed opportunities before ...
Globalviewer58
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Globalviewer58 »

You have a CPA background and need help with the Federal and State capital gains tax rates applicable to sale of mutual fund shares? Have you worked as a CPA recently? You might want to take a refresher course on taxation.

Bitcoin is total speculation but it seems you know that and want to proceed. A fool and his money are soon parted. This may be an expensive lesson in speculation vs investing.
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bigguy8437
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by bigguy8437 »

Globalviewer58 wrote: Wed Mar 24, 2021 9:09 pm You have a CPA background and need help with the Federal and State capital gains tax rates applicable to sale of mutual fund shares? Have you worked as a CPA recently? You might want to take a refresher course on taxation.

Bitcoin is total speculation but it seems you know that and want to proceed. A fool and his money are soon parted. This may be an expensive lesson in speculation vs investing.
I work in audit, I don’t deal with anything regarding taxes at all, outside of studying for the cpa and school 6 years ago.
TNWoods
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by TNWoods »

Randy Quaid? That you?

TNWoods
Impatience
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Impatience »

I like bitcoin. I own some Bitcoin. But committing 100% to it would be absolutely nuts. What if a bunch of countries ban it? Or just China? You’ll be exposing yourself to enormous political and regulatory risk. What if Bitcoin loses to ether or some other crypto or basket of crypto’s and slowly falls into obscurity? And I mean very slowly falls, slow enough that you will keep holding your bags and assuring yourself it will make a comeback.

The world stock market isn’t going to 0 but Bitcoin could. That’s all that really matters. Put 10% into it max IMO or put 5% in and 5% into various other promising cryptos.

Btw if this thread is bait it’s brilliant, I expect 100 pages of replies in the morning.
adamthesmythe
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by adamthesmythe »

You're young. You have time to start over if it all goes to zero.
lostdog
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by lostdog »

Will you be able to handle the extreme anxiety every day?
alfaspider
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by alfaspider »

Your Bitcoin already went to zero once, and you want to gamble significantly more money on it now?

Your $500k in index funds should double in 7-10 years. Is that not enough for you? If so, why not?
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bigguy8437
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by bigguy8437 »

lostdog wrote: Wed Mar 24, 2021 9:15 pm Will you be able to handle the extreme anxiety every day?
Probably not, but I do already get anxiety daily about tons of other stuff :D
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bigguy8437
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by bigguy8437 »

alfaspider wrote: Wed Mar 24, 2021 9:18 pm Your Bitcoin already went to zero once, and you want to gamble significantly more money on it now?

Your $500k in index funds should double in 7-10 years. Is that not enough for you? If so, why not?
I honestly think that when I see friends, co workers etc. talking about how Bitcoin investing has made them wealthy, I want a piece of it myself. Also, with Tesla accepting Bitcoin as a form of payment, as well as it becoming more mainstream, it opens my eyes a bit.
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celia
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by celia »

You’re young and can afford this learning experience. I hope you don’t have any dependants though.

Why don’t you buy it in a Roth account? That way, the growth, if any, will be tax free.
alfaspider
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by alfaspider »

bigguy8437 wrote: Wed Mar 24, 2021 9:20 pm
alfaspider wrote: Wed Mar 24, 2021 9:18 pm Your Bitcoin already went to zero once, and you want to gamble significantly more money on it now?

Your $500k in index funds should double in 7-10 years. Is that not enough for you? If so, why not?
I honestly think that when I see friends, co workers etc. talking about how Bitcoin investing has made them wealthy, I want a piece of it myself. Also, with Tesla accepting Bitcoin as a form of payment, as well as it becoming more mainstream, it opens my eyes a bit.
FOMO is a terrible reason to invest in something. Bitcoin may have more upside, but you aren’t going to get 1,000x returns like the early entrants. The easy money was earned a long time ago.

Tesla isn’t really accepting bitcoin. If they were, they’d price them in BTC. All their models are priced in $USD. If Bitcoin drops by 10% relative to the dollar tomorrow, the price of a Tesla in dollars isn’t going to drop 10%.
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by arcticpineapplecorp. »

Actin wrote: Wed Mar 24, 2021 8:54 pm Do it OP

People on here said I was crazy for doing 100x leveraged long on Gamestop.

We'll prove them all wrong
never confuse outcome with strategy.

now back to the OP,
Bitcoin, for example, accounts for less than 1% of the world’s money.

source: https://www.rankred.com/how-much-money- ... the-world/
yet you want to put 70% of your net worth into something that the market only puts less than 1% in?

now that's some "extreme tilting" my friend.

best of luck*

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It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by alfaspider »

celia wrote: Wed Mar 24, 2021 9:28 pm You’re young and can afford this learning experience. I hope you don’t have any dependants though.

Why don’t you buy it in a Roth account? That way, the growth, if any, will be tax free.
But the Roth space can’t be replaced if you lose it all.
jello_nailer
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by jello_nailer »

When you walked away I thought at first you were a cowboy, then I realized you liquidated $500k of your taxable and went all in on bitcoin.

I was listening for brass clanging but I just couldn't hear anything...
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bigguy8437
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by bigguy8437 »

celia wrote: Wed Mar 24, 2021 9:28 pm You’re young and can afford this learning experience. I hope you don’t have any dependants though.

Why don’t you buy it in a Roth account? That way, the growth, if any, will be tax free.
I currently have my Roth with vanguard and invested in vanguard total stock market. Can I invest in Bitcoin with it?!
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celia
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by celia »

alfaspider wrote: Wed Mar 24, 2021 9:29 pm
celia wrote: Wed Mar 24, 2021 9:28 pm You’re young and can afford this learning experience. I hope you don’t have any dependants though.

Why don’t you buy it in a Roth account? That way, the growth, if any, will be tax free.
But the Roth space can’t be replaced if you lose it all.
That’s true for any asset you put in Roth that goes bad.
SlowMovingInvestor
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by SlowMovingInvestor »

There was a post 2 days back by someone who suggested that 70% BTC, 30% VTI was the ideal AA. That seems the same as your proposed AA, so at least you have company.

Is the 70% BTC/80% VTI being suggested by some crypto guru or by some reddit board ?
Last edited by SlowMovingInvestor on Wed Mar 24, 2021 9:40 pm, edited 1 time in total.
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slowandsteadywins
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by slowandsteadywins »

I am not sure if you wanted people to provide reasons to do this, or to try and talk you down from it? The former would be ignorant, the latter naive. Arguing against someone is psychologically shown to make one dig in more into their opposing view or point. Do what you want, it's not advised from the Boglehead Way, not by a long shot.
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Doom&Gloom
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Doom&Gloom »

jello_nailer wrote: Wed Mar 24, 2021 9:33 pm When you walked away I thought at first you were a cowboy, then I realized you liquidated $500k of your taxable and went all in on bitcoin.

I was listening for brass clanging but I just couldn't hear anything...
:wink:
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JoMoney
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by JoMoney »

bigguy8437 wrote: Wed Mar 24, 2021 9:34 pm
celia wrote: Wed Mar 24, 2021 9:28 pm You’re young and can afford this learning experience. I hope you don’t have any dependants though.

Why don’t you buy it in a Roth account? That way, the growth, if any, will be tax free.
I currently have my Roth with vanguard and invested in vanguard total stock market. Can I invest in Bitcoin with it?!
It's a horrible idea, but I know there is at least one closed-end fund (that trades like a stock but without the ability to redeem for NAV like an ETF, and has high fees), that invests in bitcoin. There are probably some other exchange traded products out there. You would have more options if you used a "Self Directed IRA" custodian that allows for owning non-standard non-typical brokerage traded assets... Those IRA custodians will layer some hefty fees for their "services" and you'll likely run into other complications that make it a really really bad idea.
Last edited by JoMoney on Wed Mar 24, 2021 9:44 pm, edited 1 time in total.
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Topic Author
bigguy8437
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by bigguy8437 »

SlowMovingInvestor wrote: Wed Mar 24, 2021 9:38 pm There was a post 2 days back by someone who suggested that 70% BTC, 30% VTI was the ideal AA. That seems the same as your proposed AA, so at least you have company.

Is the 70% BTC/80% VTI being suggested by some crypto guru or by some reddit board ?
No, it was really just the math of my taxable account being 70% of my net worth and not some percentage that I came up with
FireProof
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by FireProof »

Make sure you leverage it.
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celia
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by celia »

bigguy8437 wrote: Wed Mar 24, 2021 9:34 pm I currently have my Roth with vanguard and invested in vanguard total stock market. Can I invest in Bitcoin with it?!
Not directly, but there are a few Bitcoin ETFs you could buy. Fidelity is planning one, from today’s news.
Last edited by celia on Wed Mar 24, 2021 10:00 pm, edited 1 time in total.
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by typical.investor »

bigguy8437 wrote: Wed Mar 24, 2021 8:46 pm I really do think it is the future and that I can at least 2x my investment (and likely more). I know this isn’t the forum or crowd for it, but how crazy does that sound? Am I taking a huge risk? If I bought Bitcoin, I’d buy it through coin base pro which seems to offer a lot of protection. I really do think Bitcoin can hit 500k in the next 20 years.
Then go for it.

The only way I would do it is to rebalance as though it's a risky investment. So maybe 50% BTC and 50% cash and rebalance. I wouldn't keep rebalancing into BTC as the price plummeted though and would keep some gains in the safe asset.

Personally, I don't see the allure (not good as a currency, can split value, taxation, fraud) and view it as speculation rather than investment.
jackb1117
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by jackb1117 »

I am also a relatively young boglehead. I also think bitcoin is here to stay & have FOMO (fear of missing out) about missing getting in somewhat early. I also understand bitcoin may be tulip bulbs. And like everyone else here, I can't predict the future.

That being said, I put less than 1% of my net worth into crypto (btc, etc, ltc). Scratched the speculation itch, feels reasonable, has upside potential without getting ruined on the downside.

Your proposal, to this community, is insane. That's not to say you are wrong, but rather to say this is a community that believes in using tried & true strategies to get wealthy reliability. We might be wrong too, but our track record is longer than cryptos.

I would advise against going all in, but wish you the best of luck either way. Keep us updated.
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Fudgie
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Fudgie »

A fellow assured me yesterday that Bitcoin is a safer investment than stocks/bonds. It feels so irrational and bubbly!!! Everyone is excited about it. Fortunately, I seem to be too dim a bulb to understand it. What ensures that Bitcoin is the future?

I did acquire about $20 in BTC a few months ago for a website payment test, and it has since grown to over $100. Pretty impressive, but it also makes my stomach lurch.

I wouldn't do it. It would drive me MAD if my $500K turned into $100K in a few short months.

Good luck!
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Stinky
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by Stinky »

If you do it, please post back in a year or so and let us know how it’s working out.
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typical.investor
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by typical.investor »

celia wrote: Wed Mar 24, 2021 9:51 pm
bigguy8437 wrote: Wed Mar 24, 2021 9:34 pm I currently have my Roth with vanguard and invested in vanguard total stock market. Can I invest in Bitcoin with it?!
Not directly, but there are a few Bitcoin ETFs you could buy. Fidelity is planning one, from today’s news.
I don't think the ETFs are necessarily a good way to invest.

Bitcoin can do a hard fork and mint a new coin with substantial value. Fidelity's ETF would not confer the value of the split into your holdings.
qwerty123
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by qwerty123 »

jackb1117 wrote: Wed Mar 24, 2021 10:02 pm That being said, I put less than 1% of my net worth into crypto (btc, etc, ltc). Scratched the speculation itch, feels reasonable, has upside potential without getting ruined on the downside.
Hopefully you mistyped and meant eth instead of etc.
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Re: Transferring entire 500k taxable account to Bitcoin?

Post by dru808 »

It’ll either be the best thing you’ve ever done or the worst. Please provide some sort of evidence of this transaction and keep us updated if you go through with it. I’m really hoping this isn’t a troll post, not sure what kind of confirmation you were looking for on this forum, I’ve even read Reddit crypto posts that would advise against going all in on Bitcoin.
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