Few brokerages are great at everything.
Not long ago, investing in cryptocurrency meant finding a niche financial startup that traded in the obscure. These days, however, you can't shake the proverbial stick without hitting a stock broker happy to sell you crypto.
Indeed, some of the best free stock trading apps will also let you invest in various forms of cryptocurrency. This makes it easy to have all of your investment accounts -- including your IRA or other retirement account -- with the same broker.
While it may seem convenient to have all of your accounts in one place, there are a number of arguments in favor of diversifying your brokers. And in some cases, it may not be a choice.
The best platform for each investment
The root of the question of where to make your crypto investments comes down to the platform. For some folks, there may not be a decision to be made at all, as their primary stock trading platform may not even support direct cryptocurrency investing.
Even if your brokerage does support some crypto investing, that support may be limited in scope. For example, several of the most popular brokerages only allow trading in mainstream currencies like:
If you want to invest in a new or cutting-edge currency, you may need to head to a crypto exchange that specializes in digital currencies.
And you also need to consider whether your stock broker's platform will be a user-friendly place to trade in crypto. Many traditional stock brokerages will have only offered cryptocurrency trading for a few years at best. In contrast, some crypto-centric platforms, like Coinbase, have been around for more than twice that long. This means they're more likely to have robust resources dedicated to digital currencies that regular stock brokerages may lack.
Account bonuses vs. balance benefits
Another aspect to consider when deciding where to open your crypto account is whether you could benefit from new account bonuses with a different broker.
Once upon a time, you could get free Bitcoin just by opening a crypto account with a popular crypto exchange. These days, you're less likely to be handed free crypto just for signing up -- but it's not out of the question, especially if you open an account with a platform that specializes in crypto investing.
And you can still find decent new account bonuses for opening a conventional brokerage account, IRA, or other retirement account with a more traditional brokerage. This could make it well worth the inconvenience of having multiple brokers.
At the same time, it can be worthwhile to consider if you'll be missing out on any particular perks from having more of your money invested with a single broker. For example, some brokerages may offer lower fees or additional benefits for reaching a certain minimum balance amount across all of your accounts. If keeping your crypto elsewhere could cost you, it may be worthwhile to keep all of your accounts in one place.
Retirement in one place, speculation in another
One good argument in favor of having separate brokerages for your various stock and crypto accounts is to keep the lines clear between your long-term, lower-risk investments, and your speculative, high-risk investments.
Cryptocurrency is volatile, and with that volatility comes a lot of risk. Therefore, it's not particularly wise to invest money in cryptocurrency that you can't afford to lose.
By keeping your crypto account at an entirely different brokerage than, say, your retirement account, you'll have a much easier time keeping serious investment funds separate from your speculative crypto funds. If you have to transfer funds to an entirely different institution, you're a lot less likely to impulse buy Bitcoin with money earmarked for your IRA.
Brokerages are very much like any tool: You need the right one for the job. Given the relative novelty cryptocurrency still enjoys, the best tool for your crypto account may not be a brokerage that's been focused on stocks for the better part of a century. Of course, every investor is different, so make the choice that works best for your individual investment needs.
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