Now more than ever, the future of retirement is in question for millions of Americans. Social Security faces the threat of insolvency. The 60/40 portfolio investors have relied on for so many years is beginning to falter. And the cost of living continues to skyrocket.

With so much uncertainty, it’s clear that the old ways of planning for retirement may not cut it in the future. 

Achieving long-term financial sustainability requires a bold, new approach and a fresh perspective.

It’s Time to Rethink Investing for Retirement

Seeking new ways to invest for the future is what first led Alto founder and CEO Eric Satz to ask, “Can I do that with my retirement funds?”

However, it wasn’t until he made his first self-directed IRA investment that he discovered just how big the problem was. Not only was the process unnecessarily complicated. Worse, it denied millions of Americans the opportunity to better invest for their futures.

So he set out to fix it.

Alto is on a mission to make alternative assets accessible for all. Because true portfolio diversification shouldn’t be a tool available only to the wealthy.

It was with this mission in mind that we decided it was time for a powerful, new visual and brand identity. One that embodies the optimism that a better future is within reach.

Say Hello to the New Alto

For too long, saving for retirement has been viewed as, well, boring and impersonal. You set a desired retirement date and risk appetite, contributed funds, and your plan did the rest. 

Generally, this meant a portfolio consisting of the same stocks and bonds found in countless other retirement portfolios. But as Eric Satz is fond of saying, “Another mutual fund doesn’t get you more diversification. It just gets you another mutual fund.”

Read more: Why Is It Important to Diversify Your Portfolio?

Alto is for the investor who wants more. More opportunities. More diversification. More control. 

The Logo

Redesigned completely, Alto’s new logo, with its asymmetrical “A,” and contrasting well-defined angles and soft curves, represents a profound shift in mindset: From taking a passive approach to investing for your future to an active one in which you’re in the driver’s seat. 

With Alto, you get to choose how you invest your money and in what—whether that’s in startups, crypto, real estate, fine art, or a menu of other alternative assets. 

Historically unavailable to Main Street Americans, these investments vary significantly in how much or how little they’re correlated with public markets, giving them the potential to increase risk-adjusted returns.

Who knows, you might even invest in the next big thing.

Read more: How to Invest in Startups Using Your IRA

The Color Palette

Replacing the purples and blues of our old brand are inviting shades of green, telegraphing both an air of approachability while exuding confidence. By choosing Alto, you’re saying, “I am in control of my future.”

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Accenting these new primary colors are a variety of vibrant colors with names like tangerine, sunset, rose, and sky. 

Equal parts energetic and sophisticated, the spectrum of colors reflects both our growing roster of alternative investment options and optimism for the future.

The Imagery

Previously, we relied on illustrations to showcase our offerings. With our rebrand, we’ve opted for a more aspirational feel. One that juxtaposes old and new, evoking a sense of adventure. Retirement, after all, may very well look different in 20 years.

In fact, earlier this year, Alto conducted research to better understand the mindsets of different age groups toward retirement. By and large, we found younger generations hope to retire earlier.

Whether early retirement is achievable—and whatever “retirement” even means in the future—one thing is certain: The idea of retirement as a “time to wind down” is shifting. 

In response to these evolving perceptions, we’ve chosen imagery that reflects not only a desire to make the most of life, but also reinforces the idea that the decisions we make today can have a profound effect on our tomorrow.

Closer to home, the decision to focus on “human” imagery represents Alto’s approach toward you, the investor. Planning for your future can be intimidating. Which is why we pride ourselves on offering an in-house client experience team, who can help you navigate each step of your experience on the Alto platform. When you call or email Alto for help, you can take comfort knowing that the person helping you not only cares, but believes strongly in our mission.

The Messaging

Of course, a brand is more than looks. As part of our new brand, we’ve been deliberate about employing language that is empowering and hopeful. We’re also doubling down on our mission to drive equality through education, as you’ll see more in the coming months.

By taking a more active role in investing for your retirement, a better future is within reach. We’re here to help you achieve it.

The Website

Making alternative investing accessible doesn’t stop with enabling investments in a variety of opportunities.

To this aim, our new website was designed with Web Content Accessibility Guidelines (WCAG) 2 Level AA in mind. 

Developed by the World Wide Web Consortium Web Accessibility Initiative, the WCAG is an international standard for developing websites to accommodate people with disabilities, and includes measures such as ensuring sufficient contrast levels and making text visible for screen readers. 

We made these changes because we believe that everyone should have the opportunity and ability to take control of their financial futures.

Making Alternatives Accessible for All

From the start, Alto’s mission has been to make investing for retirement more equitable by expanding access to opportunities once available only to the ultra-wealthy.

Alto currently offers two options to invest for your future tax-advantaged:

• Alto IRA gives you the opportunity to invest in a wide variety of alternative assets like private equity, venture capital, and real estate.
• Alto CryptoIRA lets you buy and sell up to 200+ cryptocurrencies through integration with Coinbase, the largest publicly traded exchange in the US.

Open an Alto account today and discover a world of investment opportunities previously off-limits to most Americans.

The post Alto’s Got a Bold New Look appeared first on Alto.

Roth IRAs are a powerful investment tool due to their tax-free nature. Though the contribution limits and Roth IRA income limits set by the IRS are relatively straightforward, calculating your modified adjusted gross income (MAGI) can be a complicated process.

Today, we’re arming you with the basics to help you determine, “Am I eligible for a Roth IRA?” This guide will include a three-step process you can use to calculate MAGI for yourself and provide basic information to consider when you’re married and filing jointly.

Roth IRA Benefits

A Roth IRA is a tax-free retirement account. While investors must pay taxes on their non-qualified investments when they sell assets, the main benefit of a Roth IRA is that withdrawals are completely tax-free once an investor takes a distribution, assuming their account has been open for at least five years and that they’ve waited until age 59-½ to make a withdrawal.

Other Roth IRA benefits include:

• No required minimum distributions (RMDs)
• Tax-free distributions for the heirs who inherit your Roth IRA
• Access to funds if you need to withdraw early (Though not recommended, you can withdraw from your contributions penalty-free at any time, but not from your gains.)

Read more: Traditional vs. Roth IRAs: Which Is Better?

How to Know If I am Eligible for a Roth IRA

To be eligible for a Roth IRA, you must have:

1. Earned income
2. A MAGI below Roth IRA income limits, as determined by the IRS

We’ll share details on how to calculate your MAGI in a bit. But first, you can use the chart below to determine your Roth IRA eligibility for the 2022 and 2023 tax years.

As you can see, Roth IRA income limits increased from 2022 to 2023 for most filing statuses. That’s not the only limit that increased—for the 2023 tax year, the IRS increased the IRA contribution limit from $6,000 to $6,500 ($7,500 for participants 50 and older).

Read more: What the 2023 IRA Contribution Limit Increase Means for You

How to Calculate MAGI for Roth IRA Eligibility

Now that you know the Roth IRA income limits, you’re probably wondering how to calculate your MAGI, especially if you think you might be teetering on the limit.

Simply put, MAGI is an IRS calculation used to determine eligibility for not only Roth IRA contributions but also certain tax deductions and credits.

To calculate your MAGI, first, you need to calculate your gross income and your adjusted gross income (AGI). Generally, a person’s MAGI will be close in value to their AGI. However, the exact relationship between the two numbers will depend on a person’s unique circumstances and the deductions they’re eligible for.

Step 1: Calculate Your Gross Income

To calculate your gross income, add all money you earned during a particular year, without tax deductions. Gross income includes:

• Wages, tips, and salary
• Business income
• Dividends
• Rental and royalty income
• Unemployment
• Capital gains
• Farm income
• Alimony payments
• Interest
• Retirement income

Step 2: Calculate Your Adjusted Gross Income (AGI)

Now that you’ve added up all the money you earned during a particular year, to calculate your AGI, take the total income you brought in and subtract your allowable deductions. Common deductions include:

• Student loan interest
• Health savings account contributions
• One-half of self-employment tax
• Tuition and fees
• Educator expenses
• IRA and self-employed retirement plan contributions
• Self-employed health insurance payments
• Early withdrawal of savings penalties
• Certain business expenses of performing artists, reservists, and fee-basis government officials

Step 3: Add Certain Deductions Back to Your AGI to Calculate Your MAGI

Now that you have your AGI, you need to add back certain deductions to calculate your MAGI. While many people will have an identical AGI and MAGI, the IRS separates the two because certain credits and deductions are phased out as your income increases.

Add these deductions back to your AGI to calculate your MAGI:

• Student loan interest
• One-half of self-employment tax
• Tuition and fees
• Qualified tuition expenses
• Passive income or losses
• IRA contributions
• Non-taxable Social Security payments
• The exclusion for income from U.S. savings bonds
• Foreign income and foreign housing exclusions
• The exclusion for adoption expenses under Section 137 of the Internal Revenue Code
• Rental losses
• Losses from a publicly traded partnership

So, for example, if you were filing as single for the 2022 tax year with the following conditions, you would qualify to contribute to a Roth IRA since your MAGI would fall within the limit ($129,000).

AGI: $120,000
Foreign income: $2,000
Self-employment taxes: $1,500
Passive income or losses: $4,000
= $126,750

If you want an estimate, you can use a MAGI calculator. However, it’s best to consult a financial or tax advisor.

How to Calculate MAGI If You’re Married and Filing Jointly

If you’re married and filing jointly, the IRS essentially views you and your spouse as one entity for tax purposes, meaning your gross income and deductions are combined. So, for example, if you had a gross income of $85,000 and your spouse had a gross income of $100,000 during the 2022 tax year, you’d combine the gross income ($185,000) and then start with step 2.

What If My Spouse or I Got a Raise or Bonus During the Year?

If you or your spouse received a raise or a bonus at work, you must include it while calculating your gross income. If this pushes your combined MAGI beyond the Roth IRA income limit, you can still contribute to a Roth IRA via a backdoor Roth IRA conversion.

Backdoor Roth conversions involve paying a one-time tax on the amount to be converted and are popular among wealthy investors, who will often complete a series of conversions over several years to avoid being pushed into a higher tax bracket.

Read more: What Is a Backdoor Roth IRA?

Invest a Portion of Your Roth IRA Funds in Alternative Assets

If your MAGI falls below the Roth IRA income limits, congratulations! You qualify to contribute to a Roth IRA. This powerful tool can help you invest for the future while making use of unique tax advantages. While conventional IRAs are a popular choice, many savvy investors are choosing to allocate a portion of their retirement funds to a self-directed Roth IRA, which allows participants to invest in a wide variety of alternative assets, including startups, real estate, fine art, farmland, and even cryptocurrency.

Open an account today to get started.

This article is solely for educational purposes. Alto and its affiliates are not tax, legal, or investment advisors. To determine your AGI, MAGI, eligibility to contribute to a Roth IRA, or any other tax status, you should consult with a tax professional. The contents of this article should not be relied on to determine any taxes that relate to your earnings.

The post Am I Eligible for a Roth IRA? appeared first on Alto.

If you’ve watched The Social Network, you may remember that billionaire Peter Thiel, a serial entrepreneur and successful venture capitalist, was one of the first outside investors in Facebook. Thiel invested $500,000 in 2004 for a 10.2% stake in Facebook.

When Facebook—since-rebranded as Meta—went public in 2012, Thiel owned 2.5% of the company. Had he not sold the majority of his shares shortly after the initial public offering (IPO), his stake would have been worth billions today. However, his move was hardly a blunder. He sold the majority of his stake for $400 million—800 times his initial investment.

What’s more? Because he made the investment using a self-directed Roth IRA, he’ll never pay taxes on those gains.

But more importantly, you can use this same strategy to invest in startups, and you don’t need a lot of money to get started. (As you’ll find out, Thiel accumulated one of the largest Roth IRAs ever off a single contribution totaling less than $2,000 combined with some very smart investments.)

Here, we’ll be talking about the reasons to invest in startups—plus how investing in startups using an IRA can be a super-savvy way to diversify your portfolio.

Key Takeaways

• Early investments in startups, while risky, have the potential for oversized returns, add diversification to your portfolio, and can help foster innovation.
• Companies are waiting longer to go public, making it harder for stock investors to get in on businesses during their early, hyper-growth years.
• Investing in startups with a self-directed Roth IRA makes it possible to avoid paying any taxes on returns upon eligibility to take qualified distributions.

Why Invest in Startups?

Imagine investing in the next Facebook, Tesla, Uber, or Airbnb—startups that hit it out of the park and are today worth billions. While this may seem inaccessible to all but professional investors, more and more Main Street Americans are dabbling in startup investing, within more limited means.

If you’re able to spot potential and invest early, you could be part of similar startup success stories. Investing in startups is also a great opportunity for you to diversify your investment portfolio while affording you the satisfaction of having helped a business that you believe in.

Nonetheless, you should be aware of the risks before investing. No investment is a guarantee, particularly one in an early-stage company.

According to data from the Bureau of Labor Statistics, nearly 20% of new businesses fail within their first year. The same data demonstrates that almost 50% on average shutter within five years, and close to 70% don’t make it past the 10-year mark. In other words, never invest more than you can afford to lose.

So with so much risk involved, why invest in startups?

If you have the risk appetite, startup investments could be a valuable addition to your portfolio. Here are three reasons to consider investing in startups:

1. The Potential for Outsized Returns

Peter Thiel’s high-return investment in Facebook is just one example of any early investment that paid off. Plenty of other people and funds have made wildly successful investments in pre-IPO businesses.

Investing early comes with the benefit of owning a stake in a company at a low valuation—before its worth potentially skyrockets with continued success.

This is especially significant when you consider that companies are waiting longer to go public. According to The Economist, the average age of a company going public since 2001 is 11 years, compared to just eight years in the 1980s and 90s.

What does that mean for stock market investors? For starters, it’s harder to invest in up-and-coming businesses before their valuations climb, potentially quite dramatically.

Regulatory changes over the past decade have made great strides toward enabling Main Street Americans to invest in private offerings, like private equity and venture capital funds. Play it right, and your early investment in a high-potential startup could bring you multifold returns in years to come, often enough to compensate for failed bets.

2. The Opportunity to Change the World

Startups often take up BHAGs—big, hairy, audacious goals that attempt to tackle major issues impacting humanity and the planet. For example, Xilis, an American biotech company, is exploring artificial intelligence to generate a living model of a patient’s tumor to better determine the optimal treatment or drug to treat that particular cancer.

Startups are also creating futuristic technologies like flying cars, and even attempting to conquer space, the final frontier. Thousands of startups across sectors are trying to shape the world and improve quality of life.

Investing early in a startup you believe in or find fascinating lets you have a front row seat to a potentially world-changing idea and enables you to support and co-create a future you want to see.

3. Portfolio Diversification

Public markets can be extremely volatile, and it’s important to recognize that a variety of stocks does not constitute true portfolio diversification. You don’t need to look far to see this.

Today, as during other market sell-offs, public equities are, for the most part, down across the board. For example, stocks dropped by around 50% between October 2007 and March 2009, meaning that even if some stocks were winners, the losers likely would have brought down your entire stock portfolio.

Investing in startups can help you diversify your portfolio. This strategy can pay off especially well if you are making high-risk, high-reward investments early on in your career, when you are young enough to accrue their financial benefits and more likely to sustain losses, if any.

That being said, anyone can benefit from investing in startups. It is, however, essential that you are well aware of the risks of investing in early-stage businesses and, as such, thoroughly understand the business you’re investing in.

Read more: Why Is It Important to Diversify Your Portfolio?

How to Invest in Startups

Unlike buying stocks or mutual funds, the process for how to invest in startups before IPO may seem a bit mysterious. And for years, it was. You pretty much had to ‘know someone’ or have a lot of money. Fortunately, that’s no longer the case.

Here are four ways you can invest in startups:

1. Venture Capital

Venture capital funds raise money from eligible individuals, called limited partners (LPs). VC funds research industry trends, evaluate companies that align with their sector focus, and finally make investment decisions after conducting due diligence.

Venture capital is a good match for companies that target sizable addressable markets and have the potential to scale quickly. Since venture capital funds invest time and effort in evaluating companies, investing in startups as an LP in a VC fund may be a good option for those looking to be relatively hands-off in the process.

You can even invest in venture capital using a self-directed IRA, like Peter Thiel did.

Alto has partnered with AngelList to provide accredited investors options to invest in rolling funds alongside experienced VCs, managed funds like the AngelList Access Funds, and individually through syndicates if you want to be more hands-on. The minimum buy-in is $1,000.

Read more: What Is an Accredited Investor and How Do I Become One?

2. Personal Angel Investing

If you have your eye on an early-stage startup that you want to invest in—and possess sufficient funds to do so—you could find a way to reach out to them through your personal network and express your interest in being an angel investor. Angels often play a mentorship and advisory role as well, beyond the funds they invest.

Depending on how much you invest and what experience you have to offer, startups may be open to bringing you on board as an angel if you have relevant professional expertise that would contribute to their growth and provide them with industry connections.

3. Angel Networks

If it’s hard to get good deal flow as a solo angel investor, you can consider joining angel investing networks. These are often organized around common interests, like alma mater. Stanford Angels and Entrepreneurs (SAE) is one such example of an alumni angel network.

Startups pitch to angel networks to access several investors under one roof and to raise a larger collective round through the individual contributions of many, without having to manage these individual investors themselves.

Often, angel networks will appoint a deal lead who will be the point of contact with the startup. Angel networks usually enjoy high-quality deal flow. You can consider investing through an angel network if you want to see a variety of interesting startups and also connect with other investors who share your interests.

4. Crowdfunding

Crowdfunding is one of the most accessible ways to invest in startups and is rapidly growing in popularity. In fact, the research firm Technavio estimates that the crowdfunding market will grow by $239.78 billion between 2021 and 2026.

Crowdfunding platforms like Republic, Ignite Social Impact, and InfraShares allow you to dabble in startup investing without committing large sums. In fact, you can invest a portion of your retirement funds in startups with as little as $100 using an Alto IRA.

How to Use Your Retirement Dollars to Invest in Startups

Because Peter Thiel used a Roth IRA to invest in Facebook, he’ll never pay taxes on his investment. That is, as long as he waits until turning 59-½ to begin taking distributions. (Roth IRA holders must also hold their account for at least five years before taking distributions, which he obviously has.)

Still, you might be wondering: How did a billionaire use a Roth IRA? Aren’t there income limits to who can contribute to a Roth IRA?

There are, but there was a catch: Thiel used money already in his account from a previous wildly successful self-directed Roth investment. That investment was in then-startup PayPal, which he funded with a single IRA contribution of less than $2,000 made well before he exceeded the income limits. (He sold his PayPal shares for around $28.5 million after eBay acquired the payments company in 2002.)

Read more: What Is a Backdoor Roth IRA?

With Alto, you too can invest in alternative assets such as startups and other private investments that many conventional retirement accounts don’t provide access to. And you don’t need any special connections.

Investing in startups through a self-directed IRA can help you diversify your portfolio, as well as give you the opportunity to back paradigm-shifting ideas, all the while benefiting from significant long-term tax savings. Especially if you do so using a Roth IRA.

Explore our investment partners to discover your options for investing in startups and other alternative assets using your retirement dollars. You can even fund your Alto account with rollovers from an old 401(k), other IRA, or via a Roth conversion.

The post Investing in Startups: What You Need to Know and Why You Should Consider It appeared first on Alto.

Originally published February 17, 2021

Roth IRAs are an attractive investment option for many investors, offering tax-free gains and distributions. Though intended to help the middle class invest for the future, the tax advantages of Roth IRAs, paired with the investment options self-directed IRAs provide, have enabled billionaires like Peter Thiel to amass fortunes tax-free.

While lawmakers are making an effort to curb the use of “mega IRA accounts,” the number of IRA millionaires is growing. In fact, a study from 2021 showed that the number of IRA accounts with balances of at least $1 million grew 64% in a year.

Of course, the market has changed since then, but it still raises the question: Could an IRA investment provide a million-dollar retirement nest egg? In this article, we’ll cover how a self-directed Roth IRA can be an avenue for accomplishing just that. We’ll also cover:

• What is a self-directed Roth IRA?
• Benefits of investing in a self-directed Roth IRA vs. a self-directed traditional IRA
• Self-directed Roth IRA rules
• Where can you invest in a self-directed Roth IRA?

It’s important to note that a self-directed Roth IRA retirement plan may not be the best option for everyone.

There are several key factors to keep in mind before investing with a self-directed IRA, including the contribution limits, what assets you can invest in, and the investment risks. This post will explore those points in more detail.

What Is a Self-Directed Roth IRA?

A self-directed Roth IRA is technically not too different from a conventional Roth IRA. The same income limits and annual Roth IRA contribution limits apply.

The only difference is that a self-directed Roth IRA gives you control over your IRA funds and investment selections. Most brokerages and custodians offering conventional IRA instruments don’t allow investments in alternative assets—assets that are not publicly traded and therefore often illiquid.

A self-directed Roth IRA allows you to invest in alternative assets that offer the potential for outsized returns, such as real estate, startups, cryptocurrency, farmland, and crowdfunding offerings. You call the shots with this IRA investment—not the brokerage firms.

This control allows you to diversify your retirement portfolio through long-term alternative investments beyond what you would be able to do with a conventional Roth IRA.

Benefits of Investing in a Self-Directed Roth IRA vs. a Self-Directed Traditional IRA

Both self-directed Roth and traditional IRAs allow investors to control their funds and investment selections. However, their tax benefits vary.

A self-directed traditional IRA is a tax-deferred retirement account, meaning investors can often contribute more upfront and potentially qualify for a tax deduction when they file their taxes. However, they will be required to pay taxes once they go to take their distributions at retirement.

A self-directed Roth IRA is a tax-free retirement account, meaning investors pay taxes on their investments upfront but distributions will be completely tax-free once they take distributions at retirement (assuming they wait until they’re 59-½ years old and have held their Roth IRA for at least five years).

While the tax-free nature of a Roth IRA is an obvious benefit, there’s another reason why Roth IRAs are often the more attractive investment option: No mandatory withdrawals.

Roth IRAs do not have any required minimum distributions (RMDs) until the death of the account owner. Required minimum distributions are the minimum amount of money you must mandatorily withdraw from your IRA account once you reach a certain age, even if you don’t need the money and have other sources of income. For traditional IRA holders, required minimum distributions kick in at the age of 72 even if you have other income.

Read more: Traditional vs. Roth IRAs: Which Is Better?

Self-Directed Roth IRA Rules

The rules governing Roth IRA contributions are the same as for conventional Roth IRAs. However, there are specific rules about what you can invest in using a self-directed IRA.

Roth IRA Income Limits

In order to qualify to contribute to a Roth IRA, the following income limits apply for the 2022 and 2023 tax years:

Can I Invest in a Roth IRA If I’m Over the Income Limit?

While Roth IRAs do have income limits, backdoor Roth IRA conversions enable investors who have surpassed the Roth IRA income limit to transfer funds from a tax-deferred retirement account like a traditional 401(k) or IRA to a tax-free Roth IRA.

This usually involves paying a one-time tax on the converted amount. Because the transfer is considered income on that year’s taxes, some investors complete a series of backdoor Roth conversions over several years to ensure the additional income doesn’t push them into a higher tax bracket.

Read more: What Is a Backdoor Roth IRA?

Roth IRA Contribution Limits

According to the IRS, the maximum annual total contribution limits in 2022 are:

• $6,000 annually for people under 50
• $7,000 annually for those 50 and older

For 2023, the IRS increased the limits to account for soaring inflation:

• $6,500 annually for people under 50
• $7,500 annually for those 50 and older

Prohibited Transactions in a Self-Directed IRA

There are certain prohibited transactions and disallowed investments unavailable to a self-directed IRA. Namely, you cannot use your IRA to:

• Invest in real estate if you or any disqualified party resides in, plans to reside in, or uses the property in any way.
• Purchase private equity shares in your own business or that of a disqualified party (mentioned below).
• Lend money or assets to yourself or a disqualified party.
• Invest in life insurance contracts, collectibles (like artwork, antiques, gems, stamps, etc.), non-commodity grade precious metals, and S Corporations. (Note that this does not apply to securitized collectibles.)

For a deeper understanding of prohibited transactions by the IRS, visit their site.

A disqualified party includes:

• Parents
• Spouse
• Children/adopted children and their spouses
• Grandparents
• A CPA, attorney, or fiduciary who provides services to the plan
• A financial advisor providing investment advice for a fee
• Anyone exercising control over your IRA assets and their distributions

To be safe, always discuss with a financial advisor before investing in alternative assets using your retirement plans. Or, you can use your Alto IRA to invest in alternatives through one of our investment partners.

Where Can You Invest in a Self-Directed Roth IRA?

Most conventional financial institutions aren’t well-versed in the intricacies of a self-directed Roth IRA account.

Traditional investments include exchange-traded funds, mutual funds, and publicly traded stocks routinely held by brokerage firms and banks. These companies often refuse to custody alternative investments held in self-directed Roth IRAs. Given the complexities that surround alternative investment options, it makes sense to engage an IRA custodian that specializes in this field—like Alto.

Alto is on a mission to democratize alternative investing. While these types of investments have often been reserved for the ultra-wealthy, everyday investors can now access the same portfolio diversification benefits on a smaller scale thanks to fractionalized ownership. E.g., you don’t have to buy a whole house to invest in real estate.

Alto offers two different self-directed IRAs, both of which are available as Roth, traditional, or SEP IRAs:

• Alto IRA lets you invest in real estate, farmland, startups, and more through our investment platform partners.
• Alto CryptoIRA^® enables you to buy and sell up to 200+ crypto assets through Coinbase integration.

Open an account to get started.

The post What Is A Self-Directed Roth IRA? (And Why You Need One) appeared first on Alto.

You’ve probably been watching the FTX saga unfold over the past week and are understandably concerned. In light of this ongoing situation, we feel it’s important to share how Alto and Coinbase each keep digital assets held within your Alto CryptoIRA^® safe.

Key Takeaways

• As a publicly traded company based in the U.S., Coinbase must comply with financial disclosure rules not required of privately held companies, like FTX.
• Coinbase maintains all customer assets 1:1, meaning every customer’s asset balance is fully intact 24/7, 365 days a year, ensuring overall liquidity.
• Cryptocurrencies held in your CryptoIRA are custodied in institutional-grade hot and cold storage maintained by Coinbase.
• Neither Coinbase nor Alto will lend, loan, use, or rehypothecate Alto CryptoIRA assets.

Accountability and Trust Are Critical

When we launched Alto CryptoIRA, we chose to integrate with Coinbase because of its commitment to trust, accountability, and proper risk management practices.

As a publicly traded company registered in the United States—and the largest publicly traded crypto exchange—Coinbase is required by law to report its financial data and submit to rigorous audits.

Additionally, Coinbase is a state chartered trust company under the laws of the state of New York, and acts as a fiduciary on behalf of Alto CryptoIRA accounts. In other words—and consistent with IRS rules on investments made within an IRA—assets are always considered Alto’s for the benefit of Alto’s clients. Therefore, they cannot be loaned or rehypothecated.

It also should be noted that Alto does not have any corporate holdings of crypto on our balance sheet and we don’t make crypto loans, neither our own nor on behalf of our customers.

Assets Are Backed 1:1 to Ensure Liquidity

While the circumstances varied, the collapses of Celsius, FTX, Terra Luna, Voyager, and others all appear to share a common thread: Insufficient liquidity to cover withdrawals. When confidence waned, investors apparently rushed to withdraw or sell their holdings in a classic “bank run” scenario.

Often this can result from being over-leveraged. That is, when a business borrows more than it can cover. Other firms were using client assets as collateral for loans in order to offer very high yields.

In the case of FTX, a report by CoinDesk showing that a majority of sister company Alameda Research’s holdings were in FTT, the native token of FTX—and Binance’s subsequent announcement it would be selling all of its FTT holdings—sent investors racing to pull their funds.

Unfortunately for so many investors, it appears that FTX may have been transferring client assets from one company to another to trade and use as collateral. As a result, it didn’t have the funds to cover client withdrawals, leading FTX and its subsidiaries to declare bankruptcy.

Coinbase, on the other hand, holds all customer assets 1:1 in institutional-grade hot and cold storage. That means that Coinbase maintains all Alto CryptoIRA and other Coinbase account assets fully intact and without shortfall at all times to ensure overall liquidity to cover withdrawals. All cash is held in FDIC-insured accounts.

Furthermore, neither Coinbase nor Alto is permitted to lend, loan, use, or rehypothecate Alto CryptoIRA customer assets.

And because Coinbase is both based in the United States and publicly traded, it is thus subject to much stricter reporting requirements than private, off-shore companies. This means that anyone can look up Coinbase’s SEC filings and financial audits.

For more information, read Coinbase’s recent blog post on the exchange’s approach to transparency and security. We also encourage you to read Coinbase CEO Brian Armstrong’s op-ed on the role clear regulatory frameworks can and should play in preventing events like the FTX bankruptcy from happening.

We’re Committed to Providing a Safe and Streamlined Solution for Investing in Alternatives

At Alto, our mission is to provide you with a wide range of opportunities for portfolio diversification—from crypto, private equity, and venture capital, to real estate and farmland. Because building the financial future you want starts with being able to invest in the assets you’re interested in. And most importantly, we want you to be confident in the custody of all your investments with us.

The post How Alto and Coinbase Keep Your Crypto IRA Assets Safe appeared first on Alto.

With crypto and other risk assets in a slump following last year’s bull market, you may be wondering if the current crypto winter could be your opportunity to get in while prices are low—like the lucky few who made huge profits as early investors in Bitcoin and Ethereum.

But before you dive right in, it’s important you understand how to research what crypto to buy now. Investing in crypto, after all, involves considerable risk given the volatility of cryptocurrency markets, making it essential that you do your due diligence.

In this post, we’re sharing five useful crypto research strategies to help you decide what to buy, plus tips for avoiding crypto scams. As always, there are no guarantees when investing, and you should never invest more than you can afford to lose.

Crypto Research Strategies

Bitcoin and Ethereum have typically been the starting point for many crypto investors due to their familiarity and relatively large market caps. Naturally, the further you venture down the list toward lesser-known cryptocurrencies, the more risk you may shoulder. However, if you want to delve deeper into other crypto assets, read on for tips on how to research what crypto to buy now by assessing their investment potential.

Before making investment decisions, it’s useful to consider both quantitative and qualitative factors. Quantitative factors include the price and market cap of a token, whereas qualitative factors include considering how you heard about a digital asset and whether the source was credible.

For example, if you heard about a currency through claims of its value quadrupling overnight, consider it a red flag and fact-check the data. Only consider investing in currencies you hear about through trusted sources, and never invest based on word of mouth alone.

If you believe the source is credible, consider the tactics below as you develop your own crypto research strategies.

1. Perform a Fundamental Analysis

If you’re interested in a coin, do a fundamental analysis as the first step in your crypto research process. It’s important to understand the fundamentals, especially if you plan to hold a coin or token for the long term.

When investing in stocks, traders often review a company’s profit and loss statements, EBITDA (earnings before interest, taxes, depreciation and amortization), and other potential indicators of the health of the business. While this same level of reporting is unlikely to be available, before investing in a digital asset, you should understand what problem the coin solves and whether there is demand for it. Doing so will help you determine whether the underlying project has real value.

Trading volume is another factor that can help determine a coin’s value. If there’s little or no trading volume for a coin with a lot of hype, ask yourself why that is.

However, it’s important to be aware that trade volume by itself is not a gold standard, nor should you look at the trade volume listed on just one exchange or analytics site. Recently, research by Forbes found that half of Bitcoin trades reported by exchanges were the result of wash trades.

Questions to ask:

1. Does it solve a problem?
2. Is the problem big enough that it needs to be solved?
3. What are the potential use cases?
4. Is there steady trade volume?
5. Is the trade volume relatively consistent across exchanges and sites?

2. Read the White Paper

The details of blockchain-based projects are typically shared in a white paper that is made readily available to the public.

Typically, these informational documents detail the project’s concept, plans for the future, expected timelines, and long-term value creation. A robustly constructed crypto project will have a well-defined roadmap explaining how the crypto asset derives its value and how developers plan to support its growth.

Keep in mind though that the existence of a white paper alone doesn’t necessarily signify legitimacy. Case in point: The Squid Game* currency had a white paper. Yet it collapsed after its creators fleeced investors.

Before investing in a cryptocurrency, read the white paper to understand the problem it addresses. If the solution it proposes doesn’t make sense, seems far-fetched, or appears too good to be true, you should probably avoid it.

*It’s also worth noting that purchasers of the Squid coin quickly learned they were barred from selling it.

3. Investigate Whether a Coin Has an Active Developer Community

Although many major cryptocurrencies are built on decentralized networks, legitimate ones will typically have publicly listed developer communities.

Take some time to learn about the people involved to assess whether you can trust them. Be wary if the currency’s board members have shared only first names or hide behind the anonymity of Twitter handles.

In the case of Bitcoin, the creator(s) chose to stay anonymous but put forth a solid white paper and were prolific in their writings, at least until Satoshi Nakamoto went quiet.

While you won’t know or recognize every board member or supporting company, you should be able to look them up to verify that they are real and genuinely involved. It’s also wise to look into how much of the currency its key stakeholders own, where they are based, whether they have a supporting team, and who notable investors are.

Additionally, make sure the currency is active and new tokens are being minted. You don’t want to invest in an asset that has been abandoned or is a scam.

Signs developers are active include:

• An up-to-date website
• Regular social media activity
• Community activity on platforms like Reddit, Telegram, or Discord
• Developer activity on GitHub
• Trading volume that indicates other people are investing in or trading the asset*

*Typically, the higher the trading volume, the greater the liquidity in the market, which can be a positive sign. However, as noted earlier, you should not form an opinion on trade volume alone.

4. Examine Market Sentiment

Market sentiment is what causes price fluctuations in cryptocurrencies and motivates investors to buy or sell. Pay close attention to the chatter and hype about a currency before investing in it. To do this, it’s helpful to follow crypto social media handles, news channels, and discussion groups on platforms like Reddit and Discord.

However, keep these pointers in mind as you take the pulse of the market:

• Take what’s said on Twitter with a grain of salt. Not everything you read is true.
• Beware of pump and dump schemes, in which false information is spread online to create demand and pump (drive up) a currency’s price so that a small group of people may dump (sell) their existing tokens while their value is high. The price of an unknown coin skyrocketing without reason can be an indicator of such schemes.
• People seldom give away free coins. If it sounds too good to be true, it probably is.

5. Analyze the Technicals

Technical analysis of a currency involves studying its price chart, identifying trends in past price movements and coin distribution, and assessing factors like market cap. For example, a large market cap indicates a well-established coin that is likely more stable.

This kind of technical analysis can be helpful in predicting changes in value and in determining when to buy or sell a token. (Keep in mind, though, that in the long run, time in market is often a better strategy than trying to time the market.)

Find out if the cryptocurrency imposes limits on how many tokens can be issued and how they will be distributed. Pay close attention to anything that doesn’t feel right. For example, if a few people hold a majority of the tokens, they have the power to influence price. Not to mention that if a project plans to create millions more coins, especially over a short period of time, the value of each coin might drop precipitously due to excess availability.

Hopefully this guide to crypto research strategies will help you in determining what crypto to buy now and in the future. Just keep in mind that there are exceptions to every rule.

One More Consideration Before You Invest in Crypto… Taxes

As a final note, it’s important to consider how you plan to invest in crypto. Not only do you have a range of options, your tax responsibilities vary depending on the route you take.

Without getting into the details of centralized and decentralized exchanges, wallets, keys, and the like, be aware that every purchase and sale of crypto constitutes a taxable event. So if you’re new to crypto investing, be sure you have a plan. (Don’t know where to start? Check out the Crypto Taxes 101 post our friends at CoinLedger wrote for us.)

Or you can invest with a crypto IRA and avoid the process of reporting trades on your taxes each year. In fact, with a Roth crypto IRA, you can avoid paying taxes on crypto gains altogether as long as you wait until you’re 59-1/2 years old and have had your account for at least five years.

Curious how you can trade up to 200+ cryptocurrencies tax-advantaged through direct Coinbase integration? Learn more about Alto CryptoIRA[superscript]®[/superscript].

The post 5 Strategies to Help You Research What Crypto to Buy Now appeared first on Alto.

There have also been adjustments to Roth IRA income limits and traditional IRA deduction limits. The tables below will help you see how these adjustments affect you and your family.

Plus, we’ll provide you with some information regarding alternative investments, a popular choice among investors seeking to diversify their portfolios beyond stocks and bonds.

Changes to Roth IRA Income Limits

Roth IRAs are a popular choice for investors due to their tax-free nature. However, higher-income taxpayers are not allowed to contribute to a Roth IRA (unless they choose to do a backdoor Roth IRA conversion.) Roth IRA income limits are dependent on a person’s income and filing status and have increased for the 2023 tax year. Below you will find the new income limits compared to 2022.

For reference, modified adjusted gross income (MAGI) refers to your adjusted gross income (AGI) plus untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.

Changes to Traditional IRA Deduction Limits

Unlike with Roth IRAs, contributions in traditional IRAs grow tax-deferred in your account until you’re ready to take distributions. A traditional IRA can be a great choice for investors seeking to reduce their tax obligation, as contributions can be partially or fully deducted from an investor’s income, depending on filing status and income.

Below are the changes for the 2023 tax year.

Exploring Alternative Investments with a Self-Directed IRA

With soaring inflation and rising interest rates, the idea of investing for the future may seem counterintuitive for many Americans. While it can be tempting to hold onto every penny with a death grip, it’s important to consider just how much you’re losing to inflation when your money is sitting in a low-yield savings account. And with some investors predicting a flat stock market for the next decade, now could be a good time to consider ways to better diversify your investments.

Why is portfolio diversification important? Especially during times of stock market volatility, diversification helps spread risk to prevent the takedown of your entire portfolio when one or two asset classes decline.

Many alternative investments, which were once reserved for ultra-wealthy and institutional investors, are now available to the general public and have the potential for gains rarely seen in public markets. Take, for example, farmland investments, which saw 16% average gains during the Great Recession, while the S&P 500 shed 30%.

Self-directed IRAs enable everyday Americans to invest in a variety of alternative assets like real estate, startups, fine art, crypto, and more.

Interested in adding alternative assets to your retirement portfolio? Open an Alto IRA or CryptoIRA today. You can even roll over funds from an old 401(k), IRA, or other retirement account-and it won’t count toward your 2023 IRA contribution limit.

Investing, especially in crypto, involves risks, including risk of loss. Do not invest without doing your research. Alto is an administrator and custodian of IRAs. Alto is not an investment advisor, broker-dealer or exchange.

The post What the 2023 IRA Contribution Limit Increase Means for You appeared first on Alto.

But what does it mean? And how does it apply to cryptocurrency held in an IRA?

To make sense of it all, we’re taking a deep dive into a number of frequently asked questions, including:

• How does the blockchain work?
• What are crypto keys?
• What is a crypto wallet?
• What do keys and wallets have to do with crypto IRAs?
• Why can’t I hold the keys to my crypto IRA?

So stick around to learn about crypto keys, wallets, custody, and what it means for you. Or, click the hyperlinks above to skip to the section you’re most interested in.

Blockchain Basics

Before we discuss how crypto wallets work or the role of public and private keys, it’s essential you have a baseline understanding of how blockchains work.

A blockchain is an immutable (meaning unalterable) ledger of transactions that is grouped into blocks and linked together in-you guessed it!-a chain.

Typically, as with Bitcoin, this ledger is decentralized, meaning it’s not governed by a central authority. Rather, nodes (basically, computers that run a cryptocurrency’s software) keep independent copies of all previous blocks.

When a new transaction occurs, it’s transmitted to these nodes, which listen for new transactions and group them into blocks. To prevent fraud, a node (also called a miner) must solve a complicated mathematical equation proving it did the work to complete a block. (This is where the term “proof of work” comes from.)

The first miner to solve the equation receives a reward for helping to build the blockchain. For example, Bitcoin miners receive BTC as a reward. Meanwhile, the other nodes validate the work against their copy of the blockchain.

If a majority of nodes see a newly created block as valid, the chain continues. But if a majority see a new block as invalid, the blockchain could split (called a fork). Gaming the system isn’t that easy, though. Because the network defers to the longest blockchain, maintaining a fraudulent record would require an unscrupulous miner to perpetually beat all other miners to completing blocks-a mathematical near-impossibility. Aside from hard forks, which are a discussion for another day, the problem will work itself out in short order. The majority of validators will reject the bad block and continue building on the original blockchain, rendering the rogue chain effectively useless.

So what does this have to do with crypto keys? A lot, actually.

What Are Crypto Keys?

Every time BTC is sent or received, it’s recorded on the blockchain. However, Bitcoin’s creator Satoshi Nakomoto designed the cryptocurrency using public-private key cryptography so that users could transact anonymously.

In this system, users have a public key and a private key, both of which are required to access your crypto. Essentially, a public key is used to encrypt a message and a private key unencrypted it.

Think of your public key as a post office box that only you can access, and your private key as the key to that mailbox. Just as anyone can send a letter to your post office box, anyone can send Bitcoin to your public key. When crypto is sent to you, it’s recorded on the blockchain as a transaction between the sender’s public key and your public key. But to access (or unencrypt) that balance – say, to send your BTC to a friend – you need your private key. Without it your crypto is stuck.

Given their complexity – each private key is a randomly generated 256-bit number that corresponds with your public key – it would be immensely difficult for even the most sophisticated of computers to hack. In fact, there are said to be fewer grains of sand on earth than private key combinations.

How does anyone remember their private key, then? To make it easier, many private keys, such as those associated with Bitcoin, are represented in a (relatively) shorter, hexadecimal format. For example, a hexadecimal private key might be:*

D7565E67B5C98CD1FA0B7569875543D9109874563AD16F02BA54CF089BD17168

Unfortunately, that’s still far from convenient. Imagine checking out at the grocery store and needing to enter your private key instead of your 4-digit PIN number. (No, thanks.) This is where crypto wallets come in.

*Example solely for the purpose of illustration. You should not use this as a private key.

What Is a Crypto Wallet?

Essentially, a crypto wallet is just a place to securely store your keys. But as you can probably imagine, there are a handful of wallet types to choose from, each with its pros and cons.

A crypto wallet could be as simple as a piece of paper with your private keys on it (hopefully stored in a safe), an online wallet, or even hardware-based-think a thumb drive (for example, the popular Nano Ledger).

Offline Crypto Wallets

Also called “cold wallets,” these range from hardware devices to purely analog solutions, making them popular for long-term storage. However, this also means less convenience when you need to access your crypto.

A private key written on a piece of paper is inherently safe from hackers, but could get lost, deteriorate, or fall into the wrong hands. Entering a private key any time (or where) you need access to your coins is also not very convenient.

A hardware wallet allows you to make crypto transactions, but needs to be connected to a computer in order to send or access your crypto. This, to many, means greater security. However, hardware wallets can stop working or be lost.

Take the British IT engineer who in 2013 accidentally threw away a hard drive that held his private keys to 7,500 Bitcoins – worth nearly $155 million as of October 27, 2022. (In case you’re wondering, he’s still looking for that hard drive, and we can’t blame him.)

Online Crypto Wallets

Often called “hot wallets,” app- or software-based online wallets tend to be more convenient, allowing access wherever you are. There’s an obvious disadvantage, though: If someone is able to get into your account, they can access your crypto.

There’s also a tremendous range of online wallets, from self-custodial wallets (Metamask and Coinbase Wallet) to custodial web-based exchange wallets (a standard Coinbase account).

Many crypto proponents, however, would argue that the bank-like functionality provided by custodial wallets goes against the founding principles of crypto. According to CoinDesk, “When a user outsources wallet custody to a business, they are essentially outsourcing their private keys to that institution.”

Ultimately, what’s right for you depends on your preferences.

Custodial and Non-Custodial Wallets

Often, exchanges offer both custodial and self-custodial wallets to accommodate various user’s needs and comfort level. With custodial wallets, when you want to buy, sell, send, or withdraw crypto, you effectively authorize the exchange to carry out those actions on your behalf.

An example of an exchange that offers both custodial and self-custodial wallets is Coinbase.

Think of a Coinbase account like a traditional brokerage account. You can buy, sell, and trade coins and tokens. But you can’t send crypto to an individual wallet, which may or may not matter to you. And you don’t hold the keys.

Coinbase Wallet, on the other hand, is a self-custodial wallet, meaning you hold your private keys in your web or mobile browser. Not only does a self-custodial wallet give you access to more digital assets. You can also send and receive crypto from specific wallets, which is essential if you intend to make purchases using your crypto.

Keys, Custody, and Crypto IRAs

Now that you have a better understanding of crypto keys and wallets, it’s probably pretty clear what people mean when they say, “Not your keys, not your crypto.”

If you don’t hold your keys (their words, not ours), someone – be it an exchange, a government, or hacker – could gain access to your crypto. On the flip side, you could easily lose your private keys forever, and many people have.

But what you really want to know is what “Not your keys, not your crypto” means in the context of crypto IRAs.

Why Hold Crypto in an IRA?

The intention behind Bitcoin was to anonymously transact with people around the globe using a currency not subject to the controls of central banks. To date, though, relatively few people and businesses use crypto for day-to-day transactions. (However, according to a recent Deloitte survey, that’s changing.)

Instead, Bitcoin has come to be seen as both a store of value and an investment. Owing to the tremendous gains Bitcoin and many other cryptocurrencies have seen over the past decade, investors are right to wonder, “Can I put crypto in my IRA?”

IRAs – especially Roth IRAs – offer not just major tax advantages over buying crypto in a brokerage account, but also enable investors to roll over funds sitting in other retirement accounts, like an old 401(k) or 403(b).

Not to mention that the long-term nature of retirement accounts makes them the perfect pair for HODLers.

How to Invest in Crypto with an IRA

When most people think of IRAs, they think of public market offerings like stocks, bonds, mutual funds, and so on. But as many savvy investors are discovering, there’s a lot more you can invest your retirement dollars in using a self-directed IRA – including alternative assets like art, crypto, farmland, and private equity.

Self-directed IRAs provide all the same tax advantages of any IRA custodian, only you get to decide how you invest your money. So a crypto IRA is just a self-directed individual retirement account that lets you invest in cryptocurrencies. And while these IRAs used to involve mountains of paperwork and high fees, that’s no longer the case.

Today, you can open an Alto CryptoIRA^® in minutes and begin trading crypto with the tax advantages of an IRA in a matter of days. And with $10 investment minimums, you don’t have to commit the large sums required by many other crypto IRAs. So you can start small if you’re unsure how much of your portfolio to allocate to crypto.

Why Can’t I Hold the Keys to My Crypto IRA?

While you might be surprised by all the types of investments you can make with a self-directed IRA, there are restrictions, which is where keys come into play.

Custody and Self-Directed IRA Prohibited Transactions

All individual retirement accounts, including self-directed crypto IRAs, are subject to U.S. tax codes. Section 408 of the Internal Revenue Code defines an IRA as “a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries.” As a result, such accounts must be administered by a bank or a trust company.

These trustees or custodians, in turn, are responsible for ensuring that money held in retirement accounts is not used improperly. After all, the government wants to make sure bad actors don’t misuse retirement vehicles to illegally dodge taxes.

For example, you can’t invest IRA funds in a second home or a personal business. Because you could, in theory, use that second residence as a vacation home – and you would certainly benefit if your personal business enjoys an injection of capital courtesy of your tax-advantaged retirement funds – you’re considered a disqualified person. So too is anyone who controls the “assets, receipts, disbursements, and investments” or who may exert influence over decisions regarding the investment.

This is at the heart of what makes holding your own keys within an IRA legally problematic.

Not only does holding the keys to your crypto appear to be direct possession of the investment instead of the trustee. One could easily send crypto they hold in an IRA to another non-IRA wallet held by them, a spouse, or another disqualified person.

Nor is it a theoretical issue as of November 18, 2021.

Checkbook LLCs, Crypto Keys, and the IRS

In the 2021 court case, McNulty v. Commissioner, the IRS determined that a self-directed “checkbook IRA” had been improperly used to purchase gold coins to be held as an investment. (A checkbook IRA is an IRA that is set up as a special purpose limited liability corporation to make investments on its behalf.)

Investing in gold within an IRA is not illegal, but taking physical possession of coins by the taxpayer is. As was selling those coins and not reporting the profits.

In effect, the defendant was able to profit from the intentional misuse of money she rolled over from other tax-advantaged retirement accounts.

While crypto wasn’t the focus of the case, it put a spotlight on the challenges self-directed IRA custodians face in keeping a watchful eye over (and preventing abuse of) checkbook LLC accounts. Challenges made especially difficult by the inherent anonymity of crypto. (Remember, you send to public keys, NOT names of account holders.)

Not only does holding the keys to your crypto (even through a checkbook LLC) likely amount to personal possession, which could put you at major risk. IRA custodians that offer checkbook LLC crypto IRAs are opening themselves up to the very real risk that account holders will unintentionally or – in the case of McNulty – intentionally skirt U.S. tax laws.

For these reasons, while checkbook crypto IRAs do still exist, most legitimate crypto IRAs do not allow you to hold the keys to your coins and tokens, citing both the recent McNulty case and Section 408 of the Internal Revenue Code.

Diversify Your Retirement Portfolio with a Crypto IRA

For some, not being able to hold their keys could be a non-starter. But for those savvy investors who recognize the tax advantages, especially in conjunction with compounding returns over years or even decades, an IRA is a smart way to allocate a portion of your portfolio to crypto.

With Alto CryptoIRA, you can buy and sell crypto tax-free or tax-deferred, depending on whether you choose a traditional, SEP, or Roth IRA. Plus, by investing within an Alto CryptoIRA, you can take comfort knowing your crypto is held in institutional-grade hot and cold storage.

Open a CryptoIRA today and diversify your portfolio with access to up to 200+ cryptocurrencies.

The post Why Can’t I Hold the Keys to My Crypto IRA? Crypto Keys Explained appeared first on Alto.

Alto’s 2022 Alternative Investing Report bears this out, showing that the investing gender gap has persisted beyond baby boomers and Gen X into millennials. Overall, male investors were three times as likely as women to have high confidence that they were investing enough to retire. Among millennials, the gap remains, with 38% of millennial men feeling secure about reaching a comfortable retirement compared to 15% of millennial women.

Despite a Confidence Gap, Female Investors Often See Greater Returns

The report looks at why women are less confident in their investments (and less likely to be investing in the first place), too. The women surveyed have less wealth and fewer assets to invest than men, which can help explain the gap in confidence. Understanding the wealth gap, and knowing that there is also an investable asset gap is critical.

However, while we know the gender gap exists, it certainly doesn’t have to be that way. For as long as the investing gender gap has been around, female investors have been outperforming their male counterparts. A decade-long study released last year found that, on average, women investors achieve positive returns and surpass men by 40 basis points, or 0.4%, annually.

What’s more, new investment options are leveling the playing field among investors, opening up asset classes to people of all financial statuses and backgrounds. Access to alternative investments and strategies that allow investors to go at their own pace can play a strong role in helping to close investing’s gender gap.

Alternative Investments: Leveling the Field

So, what, exactly, are alternative investments? Simply put, they are investments in assets outside the traditional stocks and bonds that we’re all familiar with. The list of alternatives is wide-ranging: Some of the most common include crypto, real estate, venture capital, and even art.

Alternative investments have long been a favorite of professional investors, who invest large sums of money outside the standard stock and bond markets into real estate developments, startup companies, and more. In many cases, these investments have outperformed the stock market-consider the skyrocketing valuations of startups in recent years.

Alternative investments aren’t just for institutional investors or the uber-wealthy, though. The past decade has seen these opportunities open up to everyday investors. Beyond leveling the playing field between Wall Street and Main Street, alternative investments can also help close investing’s gender gap.

Alternative investments give anyone the ability to invest in their passions-whether that’s art, startups, or any number of other choices. Alto’s research found that 60% of millennials believe that unless you are a professional investor, it’s hard to be successful with stock market investing. Alternative investments have the potential to help ease that crisis in confidence and close the gender gap by empowering women to invest how they want.

Read more:

How Millennials See Their Financial Future

Self-Directed IRAs: Opening the Door to Alternatives for All

Another critical part of being able to invest with confidence is the ability to decide how you invest for your future. As a brief explanation, there is no difference between a self-directed IRA and more conventional IRAs from a tax standpoint. A self-directed Roth IRA enables you to take tax-free distributions upon eligibility the same as any Roth IRA. Similarly, assuming eligibility, a traditional IRA and a traditional self-directed IRA both enable you to defer taxes until you make withdrawals.

The difference lies in what you can invest in. With most IRAs, your options are limited to publicly traded stocks, bonds, ETFs, and mutual funds. A self-directed IRA puts you in the driver’s seat, allowing you to invest your tax-advantaged retirement funds in the assets that you’re interested in.

With increasing confidence being a key factor in closing the gender gap, self-directed IRAs present a unique opportunity to invest at your own pace and create a portfolio of investments you know and trust.

Both alternative investments and self-directed IRAs can inspire confidence through giving investors more control over both how much they’re comfortable investing and what they’re investing in. And by doing so within an IRA, investors can tap what is for most people their largest source of investable assets by rolling over a portion (or all) of an old 401(k), existing IRA, or other retirement account. (For more on funding an individual retirement account, check out our recent post: 4 Ways to Contribute to an IRA.)

Invest In What You’re Interested In

Earlier, we talked about the confidence gap and disparity in accumulated wealth between female and male investors. While alternatives won’t solve all of these issues (and there’s still much more work that needs to be done), they can empower women (and men) to take control of their investable assets.

And, according to our research, though the majority of Americans distrust the stock market, many find hope in alternative investments.

Of women surveyed, 72% expressed interest in learning more about alternative investments, and a further 79% said they’d be likely to invest in alternatives if the opportunity existed. What’s more, 52% of millennials without an IRA expressed interest in opening one if able to hold alts in their IRA.

Self-directed IRAs provide that opportunity, allowing you to choose what to invest in and how much you want to invest-whether you’re interested in fine art, commercial real estate, socially conscious startups, or cryptocurrencies like Bitcoin and Ethereum.

Open an Alto IRA or CryptoIRA today to start diversifying your portfolio using your tax-advantaged retirement funds and take control of your financial future.

The post Women Are Less Confident Than Men About Investing. How Can This Change? appeared first on Alto.

Similarly, a recent Bankrate survey found that for those who worry about money, insufficient emergency savings was the top factor, with 57% of respondents citing it as an issue that negatively impacts their mental health

So, in honor of Financial Planning Month and National Savings Day, we’re bringing you 10 practical money-saving tips that you can apply to your life today. While we acknowledge saving money isn’t always as easy as 1-2-3, we hope these tips will help ease some financial strain and give you a good starting point as you consider ways to save for the future.

1. Automate Your Savings

Automating your savings is one of the easiest ways to save money because it’s something you don’t have to think about. As humans, we tend to seek immediate satisfaction and would often rather splurge now than invest money for the future because we’re biased toward our present selves. Automating your savings can help you overcome present bias by removing that choice entirely. Of course, you can still access those funds if you need them, but you’ll be less likely to touch those funds if they’re not sitting in your checking account.

If you receive direct deposits from your employer, you can split your paycheck between a checking account and a high-yield savings account that can help you earn interest on your savings. You can also automate your savings directly through your bank by setting automatic deposits to move from your checking account to your savings account on a set day each month. If you’re curious, here’s a list of what NerdWallet calls the six best high-yield savings accounts.

2. Create a Budget

Keeping tabs on how you spend your money is vital for planning for the future and knowing where you can cut spending. Forbes Advisor recently released a list of convenient budgeting apps for those who may want to track their spending digitally. Plus, there’s always Excel and the good old pen-and-paper method.

Money guru Ramit Sethi recommends a savings method in which you “spend extravagantly on the things you love while cutting costs mercilessly on the things you don’t.” As a general rule of thumb, Sethi recommends the following budget for your take-home money:

• 50-60%: Fixed costs (rent, mortgage, utilities, etc.)
• 10% (minimum): Long-term retirement investments
• 5-10%: Short-term savings (down payment on a house, gifts, vacation, etc.)
• 20-35%: Guilt-free spending (eating out, buying new clothes, etc.)

3. Take Advantage of “Free Money”

If you’re not contributing enough money to your 401(k) to get your full employer match, you’re leaving money on the table, and as MagnifyMoney’s Ismat Mangla points out, “It’s money that belongs to you and is part of your compensation.” Yet 17.5 million working Americans are leaving that money on the table, according to a recent survey. Don’t make that mistake if you can afford not to.

As a side note, if you quit your job last year and are not sure what to do with your old 401(k), you might consider rolling it into a self-directed Alto IRA or CryptoIRA^® to diversify your portfolio with alternative assets not available in public markets. Alternative assets often have a greater opportunity for outsized returns, making them an excellent option for those seeking to grow their wealth in a retirement account. (This could also be a savvy move if expert predictions of a flat market over the next decade prove to be true.)

4. Pay Down Debts

Tackling your debt is crucial if you’re looking for ways to save money. That’s because your debt is accruing interest over time, meaning it’s constantly working against you. Especially when you consider that the average credit card interest rate in the U.S. is 16.65%, tackling your debt first will be more effective than saving money by brewing your own coffee or really anything from this list. Once your debt is paid, you can focus more fully on your savings goals.

5. Cancel Unused Subscriptions

A recent survey by the National Research Group found that approximately two-thirds of consumers said they will have to decrease their spending because of inflation. However, respondents were less likely to cut subscription services like Amazon Prime, Netflix, and Hulu than food and gasoline.

While we’d never encourage you to cancel something that brings you joy, it’s important to keep a pulse on your subscriptions and cancel those you don’t use. Because subscriptions are charged automatically, it’s rare that a person “doesn’t have at least one sneaky charge they’ve forgotten about,” according to Kathryn Hauer, a certified financial planner.

Apps like Rocket Money can help you keep track of your subscription charges and even cancel subscriptions directly from their platform. Considering the research also found that the average person underestimates the cost of their subscription services by at least $100 a month, taking a more active role could help you save big.

6. Travel Off-Season

Catch the travel bug? If you want to save a bit on the expense, consider traveling off-season. When traveling off-season, you may be surprised at the amount of fun you can have for a much lower cost than if you traveled to certain locations during peak season. The benefits of traveling off-season include more affordable lodging options, flights, and more. (Plus, fewer crowds for our introverted readers.)

Scott’s Cheap Flights is one option that gets recommended often. It’s an email subscription that alerts you when flight prices have dropped for your favorite locations, often offering extremely low rates during the off-season. Give it a try next time you come down with the travel bug.

7. Ignore Your Raise

Have you been busting your tail going above and beyond at work? Considering finally mustering the courage to ask for a raise. After that, though, try maintaining your current budget and throw the rest into savings. The temptation may be to inflate your lifestyle to match a pay bump, but maintaining your lifestyle can help you reach your savings goals even quicker.

As an example, someone making $50,000 a year who gets just a 3% raise could save the entire raise, which would amount to $1,500 annually. Better yet, put it in a tax-advantaged retirement account like a traditional or Roth IRA to make the most of your salary increase.

8. Clean Up Your Email Subscriptions

We’re all for email subscriptions. In fact, our crypto newsletter is top-tier, if we do say so ourselves. (Ahem, subscribe by filling out the form here.) However, once you buy something online, you’re typically opting into the brand’s email promotions, and that can lead to impulse buying. If you know that a certain type of product or brand piques your desire to impulse buy, you may want to go ahead and hit the “unsubscribe” button.

9. Utilize Free Library Resources

Local libraries are a treasure trove of often-underutilized services and resources. Many offer skill-building resources like LinkedIn Learning and language courses. Additionally, libraries often offer a resource called the Libby app, which allows you to rent popular magazines and audiobooks through your local library for free. You can even rent ebooks for free and send them directly to your Kindle. This can help you cut spending while still focusing on personal development and continuous growth.

10. Shop Sustainably

You’ve probably heard it before: Buy quality, not quantity. While it’s often tempting to buy the trends (thanks Gen Z for outlawing skinny jeans), shopping sustainably by thrifting or buying classic, high-quality pieces that will last you for many years is a great way to save money over the long run. Plus, by limiting your fast fashion purchases, you’re caring for the planet.

We hope these 10 money-saving tips have been helpful to you and that they’ve given you some new ideas for upping your savings game ahead of National Savings Day. If you’re interested in investing for the future, you may consider expanding your portfolio with an Alto CryptoIRA or an Alto IRA.

Set up an account today, and contact us if you have any questions. Happy saving!

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