Bitcoin millionaires, tell us your story!

[2_Thumbs_Up]

One million is more than enough to retire. Average return on stocks has historically been ~10% before inflation. Put your money in an index fund and withdraw 3-4% each year and you got 30-40k to live on, and some pretty good margins in case the market goes really wrong. Most likely, you will still have enough left after expenses to see your capital grow.

Math:
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

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[hashstash]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

[tvbcof]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

My understanding is that it is a misnomer to say flatly 20% and that the rate is based on one's 'earned income' level.  The Wikipedia page I pointed to earlier seems to describe the same.  It seems to indicate that the rate can be much lower if one has no job or other source of 'qualifying' income.

Accd to Wikipedia, the additional percentage over $200k is new-ish and associated with Obamacare.  While I dis-like Obamacare and would rather see a single-payer system or at least a public option, I do like that they are getting at least some money out of people who engineered and exploit the long term capital gains loophole.  It would be ironic if I myself got 'burnt', but I can only a complain so much.

We might end up in a funny scenario where I pay quite a large amount of money for Obamacare, but do not receive benefits because I disagree with it on philosophical grounds and don't wish my money to go towards making the parasitic and lobbyist heavy health care industry and corrupt politicians even more rich.

[Hawker]

One million is more than enough to retire. Average return on stocks has historically been ~10% before inflation. Put your money in an index fund and withdraw 3-4% each year and you got 30-40k to live on, and some pretty good margins in case the market goes really wrong. Most likely, you will still have enough left after expenses to see your capital grow.

Math:
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Its worth checking what the average payout to investors since 1990 has been.  Its a lot lower than you think...

[2_Thumbs_Up]

One million is more than enough to retire. Average return on stocks has historically been ~10% before inflation. Put your money in an index fund and withdraw 3-4% each year and you got 30-40k to live on, and some pretty good margins in case the market goes really wrong. Most likely, you will still have enough left after expenses to see your capital grow.

Math:
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Its worth checking what the average payout to investors since 1990 has been.  Its a lot lower than you think...

You can cherry-pick any time period to prove whatever you want. But past performance does not determine future results. So the question then becomes which period will best represent the future. Unless you have a crystal ball I'll go with the biggest data set availible of 100+ years. That includes the great depression and still averages a return of almost 10% yearly.

Besides, it's not like the time period you chose is absolutely horrible. The S&P500 has still yielded a gain of 4.3 times your principal since Jan 1990. That is an average of 7+% yearly, so even during this historically bad period you could have cashed out 3-4%, lived on that and earn money over time in the process. I'm being conservative when I tell you 1 million is enough to retire.

http://finance.yahoo.com/echarts?s=%5Egspc+interactive#symbol=%5Egspc;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

[600watt]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

move to germany while holding on to your coins for 12 months. overhere NO CAPITAL GAINS TAX in bitcoin gains if you hold longer than 12 months. you save 200 k $. after a few months, move back...

http://www.coindesk.com/german-government-relieves-capital-gains-tax-on-bitcoin-positions/


speaking of future bitcoin millionaires: here is the party you shouldn´t miss:

https://btc1k.com/

[BittBurger]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

move to germany while holding on to your coins for 12 months. overhere NO CAPITAL GAINS TAX in bitcoin gains if you hold longer than 12 months. you save 200 k $. after a few months, move back...

http://www.coindesk.com/german-government-relieves-capital-gains-tax-on-bitcoin-positions/


speaking of future bitcoin millionaires: here is the party you shouldn´t miss:

https://btc1k.com/

I sent you a PM on this but ill ask publicly too in case anyone else with info can comment.  Can one just hop on a plane to Germany, get a crappy little apartment (or even stay in a hotel), and cash out all their bitcoins free of capital gains tax?  Don't you have to be a citizen, and open a Bank account?   And can you really withdraw hundreds of thousands of dollars without the german bank asking questions, blocking it, accusing you of money laundering, or simply rejecting it?  These matters are usually a lot more complex than that.  And when you go back home, how exactly do you bring hundreds of thousands of dollars with you?   

[wachtwoord]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

move to germany while holding on to your coins for 12 months. overhere NO CAPITAL GAINS TAX in bitcoin gains if you hold longer than 12 months. you save 200 k $. after a few months, move back...

http://www.coindesk.com/german-government-relieves-capital-gains-tax-on-bitcoin-positions/


speaking of future bitcoin millionaires: here is the party you shouldn´t miss:

https://btc1k.com/

I sent you a PM on this but ill ask publicly too in case anyone else with info can comment.  Can one just hop on a plane to Germany, get a crappy little apartment (or even stay in a hotel), and cash out all their bitcoins free of capital gains tax?  Don't you have to be a citizen, and open a Bank account?   And can you really withdraw hundreds of thousands of dollars without the german bank asking questions, blocking it, accusing you of money laundering, or simply rejecting it?  These matters are usually a lot more complex than that.  And when you go back home, how exactly do you bring hundreds of thousands of dollars with you?   

I'd say you'd at least need a residence permit.

[600watt]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

move to germany while holding on to your coins for 12 months. overhere NO CAPITAL GAINS TAX in bitcoin gains if you hold longer than 12 months. you save 200 k $. after a few months, move back...

http://www.coindesk.com/german-government-relieves-capital-gains-tax-on-bitcoin-positions/


speaking of future bitcoin millionaires: here is the party you shouldn´t miss:

https://btc1k.com/

I sent you a PM on this but ill ask publicly too in case anyone else with info can comment.  Can one just hop on a plane to Germany, get a crappy little apartment (or even stay in a hotel), and cash out all their bitcoins free of capital gains tax?  Don't you have to be a citizen, and open a Bank account?   And can you really withdraw hundreds of thousands of dollars without the german bank asking questions, blocking it, accusing you of money laundering, or simply rejecting it?  These matters are usually a lot more complex than that.  And when you go back home, how exactly do you bring hundreds of thousands of dollars with you?   

pm sent.

residency is obligatory i think. easy for u.s.americans to establish here in germany. of course there will be questions by the local authorities, but since it perfectly legal. choose a bitcoin friendly bank such as fidor bank. they have contracts with exchanges like bitcoin.de or kraken.

[bitcoinpsftp]

Nope, 1 million is pocket change....  OH, and if anyone wants to feel generous, I could use a million bucks.  Just pm me, I'll even travel to pick up the money.

[sgk]

I don't know about USA; maybe a million dollars are not enough to retire there. But I can retire comfortably here in India with just 200 BTC.

Let me explain.

Consider the price of a Bitcoin going up to 1000 dollars in near future. That would give me $200,000. With current exchange rate (1 $ = 62 INR), it gives me 1,24,00,000 INR. Cutting down 30% tax, I will end up having around 87,00,000 INR. I can spend 700k of them right now which is enough to buy a car. I will put 50,00,000 in a bank. Believe me or not, the banks give 9% interest per year. So I'll receive 45k INR per MONTH just by sitting and doing nothing, which is how much I currently make by doing my job (and it is considered a good salary here at the  age of 30). The rest 30,00,000 I can invest in real-estate. If you know where to invest, you can easily double your money in 4-5 years here. I have my own house, so I don't have to worry about house-buying expense.

With 45k INR per month, you can have a fairly easy life in urban India. We're not talking about buying a yacht or flying different parts of world every now and then. But you can rent a good house (if you don't have your own), eat what you want, pay your bills & your kids' education, have a maid for house chores, and take your kids for a trip to different parts of India during their vacations. The returns on my real-estate investments will allow me to adjust for inflation.

So basically with 200 BTC, I retired at the age of 30 for the rest of my life. Now I if I want, I can still work for whatever job gives me joy of working.

So there you go. I have a full-proof plan. Now I just need 200 BTC. Donations are welcome at 12LEhtP1Ty9hwMDkoHJ97DkbCXHCENpdzH

[blacksails]

I don't know about USA; maybe a million dollars are not enough to retire there. But I can retire comfortably here in India with just 200 BTC.

Let me explain.

Consider the price of a Bitcoin going up to 1000 dollars in near future. That would give me $200,000. With current exchange rate (1 $ = 62 INR), it gives me 1,24,00,000 INR. Cutting down 30% tax, I will end up having around 87,00,000 INR. I can spend 700k of them right now which is enough to buy a car. I will put 50,00,000 in a bank. Believe me or not, the banks give 9% interest per year. So I'll receive 45k INR per MONTH just by sitting and doing nothing, which is how much I currently make by doing my job (and it is considered a good salary here at the  age of 30). The rest 30,00,000 I can invest in real-estate. If you know where to invest, you can easily double your money in 4-5 years here. I have my own house, so I don't have to worry about house-buying expense.

With 45k INR per month, you can have a fairly easy life in urban India. We're not talking about buying a yacht or flying different parts of world every now and then. But you can rent a good house (if you don't have your own), eat what you want, pay your bills & your kids' education, have a maid for house chores, and take your kids for a trip to different parts of India during their vacations. The returns on my real-estate investments will allow me to adjust for inflation.

So basically with 200 BTC, I retired at the age of 30 for the rest of my life. Now I if I want, I can still work for whatever job gives me joy of working.

So there you go. I have a full-proof plan. Now I just need 200 BTC. Donations are welcome at 12LEhtP1Ty9hwMDkoHJ97DkbCXHCENpdzH

Yeah, that's the small problem, you need 200 BTC first!
But oh well, I could live in India when I become a bitcoin-milionare!

[btcprice]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

move to germany while holding on to your coins for 12 months. overhere NO CAPITAL GAINS TAX in bitcoin gains if you hold longer than 12 months. you save 200 k $. after a few months, move back...

http://www.coindesk.com/german-government-relieves-capital-gains-tax-on-bitcoin-positions/


speaking of future bitcoin millionaires: here is the party you shouldn´t miss:

https://btc1k.com/

I sent you a PM on this but ill ask publicly too in case anyone else with info can comment.  Can one just hop on a plane to Germany, get a crappy little apartment (or even stay in a hotel), and cash out all their bitcoins free of capital gains tax?  Don't you have to be a citizen, and open a Bank account?   And can you really withdraw hundreds of thousands of dollars without the german bank asking questions, blocking it, accusing you of money laundering, or simply rejecting it?  These matters are usually a lot more complex than that.  And when you go back home, how exactly do you bring hundreds of thousands of dollars with you?   

pm sent.

residency is obligatory i think. easy for u.s.americans to establish here in germany. of course there will be questions by the local authorities, but since it perfectly legal. choose a bitcoin friendly bank such as fidor bank. they have contracts with exchanges like bitcoin.de or kraken.

I would love to live in Germany for a few months. My brother lived there for awhile and loved it. I am of German heritage mostly so it would be good for me to explore my roots.

I tried to get dual American/German citizenship become of my German heritage and found out one has to be either first or second generation in order to get residency there which I am not.

[Phinnaeus Gage]

Have you done anything special or extravagant with your money?

Sure have! I kept my three wallets on InstaWallet totally 1,123+ BTC (probably really 1,132+ BTC), and to this day have yet heard a peep as to what the status is with them, even resubmitting two of the bigger claims, with the smaller claim having multiply claims on it. But, since davout is a mod here, and Boussac released the police report on the same day it was filed, I'm sure my ~$1,335,760 USD is secured, seeing that, according to the "block chain", InstaWallet is still in control of over $2M USD.

Bruno Kucinskas

[BitchicksHusband]

Why do people dream of retiring and being "set for life" anyway. Its a pretty boring way to live.

Because I would rather do the programming projects in my head and not have to worry about making money.  Instead, right now, I have to solve other people's problems that I really don't care about and I have to work with narcissistic jerks who care more about building up some imaginary kingdom at work that doesn't matter instead of serving the client's needs.

That's why.

[BitchicksHusband]

yeah you could hold them for a year and pay only 15%.

This is thus far the most tax-optimal strategy I've seen.

If you make less than $70,000 joint ($36,000 single?) other than your bitcoins then you can pay 0% capital gains.  So make sure that you hold them for at least a year.

[btcprice]

By the way, if you held your Bitcoins longer than a year, in the US they should qualify as a capital asset and therefore you would be subject only to the capital gains tax, which is 20% a year plus some additional percentage (<5) if over $200k.

move to germany while holding on to your coins for 12 months. overhere NO CAPITAL GAINS TAX in bitcoin gains if you hold longer than 12 months. you save 200 k $. after a few months, move back...

http://www.coindesk.com/german-government-relieves-capital-gains-tax-on-bitcoin-positions/


speaking of future bitcoin millionaires: here is the party you shouldn´t miss:

https://btc1k.com/

I sent you a PM on this but ill ask publicly too in case anyone else with info can comment.  Can one just hop on a plane to Germany, get a crappy little apartment (or even stay in a hotel), and cash out all their bitcoins free of capital gains tax?  Don't you have to be a citizen, and open a Bank account?   And can you really withdraw hundreds of thousands of dollars without the german bank asking questions, blocking it, accusing you of money laundering, or simply rejecting it?  These matters are usually a lot more complex than that.  And when you go back home, how exactly do you bring hundreds of thousands of dollars with you?   

pm sent.

residency is obligatory i think. easy for u.s.americans to establish here in germany. of course there will be questions by the local authorities, but since it perfectly legal. choose a bitcoin friendly bank such as fidor bank. they have contracts with exchanges like bitcoin.de or kraken.

I would love to live in Germany for a few months. My brother lived there for awhile and loved it. I am of German heritage mostly so it would be good for me to explore my roots.

I tried to get dual American/German citizenship become of my German heritage and found out one has to be either first or second generation in order to get residency there which I am not.

If you want to avoid the taxes I believe you have to give up your US citizenship because you are still taxed as an American citizen no matter where you live.  The theory is that you are still protected by the US government and you can go into an embassy anywhere in the world as a citizen.

http://money.cnn.com/2013/09/04/news/citizenship-us-tax/

Now that I remember, I don't think you have to go to those extremes to be tax free. I believe the US government releases any tax liability if you spend at least 10 months of the year working overseas.

[tvbcof]

yeah you could hold them for a year and pay only 15%.

This is thus far the most tax-optimal strategy I've seen.

If you make less than $70,000 joint ($36,000 single?) other than your bitcoins then you can pay 0% capital gains.  So make sure that you hold them for at least a year.

Doesn't seem to be sinking in.  As they say, 'you can lead a horse to water, but you cannot make it drink.'  -shrug-

To the guy who just replied as I was writing this (Ah, my old friend Holliday.)  See the wikipedia article on long term capital gains in the U.S., and also a document put together by someone running http://www.bitcointax.info' (who deserves a tip one of these days.)  In particular, note when the tax rate is 0%.  My CPA assures me that capital gains do not 'back-feed' and become earned income.

As always, though, seek qualified tax advice.  For my part, I will also be putting aside enough money to pay a significant tax bill should it come up as a result of different interpretations about what qualifies as LTCG half way through the year or something.  That's just the way I roll.  I'm not planning to throw away a good thing as happened to many of my fellow temporarily rich friends in the dotcom bubble.

 edit - fee -> feed and recognized my buddy.

[tvbcof]

My CPA assures me that capital gains do not 'back-feed' and become earned income.

This is tricky.

From what I've read, capital gains are stacked on top of your normal income, so they will not push your regular income into a higher bracket.

But... let's say your regular income is $4000 short of the amount needed to put you in a 25% tax bracket (thus 15% tax on capital gains). If you have $10,000 in capital gains, $4000 of that will be taxed at 0% and the $6000 that puts you into the next bracket will be taxed at 15%. Your regular income is still taxed at 15%. Is that what your CPA told you?

Typical disclaimer that this is not tax advice and one should seek professional tax advice, blah blah blah.

This does NOT seem to be the message I was getting in my case.

It is critically important the my Bitcoin speculation is not associated with any form of business but is rather just a private individual adventure but I forgot the exact technical term used.  If the profits are associated with a business things get very ugly very quickly.

As always, standard disclaimer, get professional tax help and some idiot on a forum does not qualify.

[btcprice]

My CPA assures me that capital gains do not 'back-feed' and become earned income.

This is tricky.

From what I've read, capital gains are stacked on top of your normal income, so they will not push your regular income into a higher bracket.

But... let's say your regular income is $4000 short of the amount needed to put you in a 25% tax bracket (thus 15% tax on capital gains). If you have $10,000 in capital gains, $4000 of that will be taxed at 0% and the $6000 that puts you into the next bracket will be taxed at 15%. Your regular income is still taxed at 15%. Is that what your CPA told you?

Typical disclaimer that this is not tax advice and one should seek professional tax advice, blah blah blah.

This does NOT seem to be the message I was getting in my case.

It is critically important the my Bitcoin speculation is not associated with any form of business but is rather just a private individual adventure but I forgot the exact technical term used.  If the profits are associated with a business things get very ugly very quickly.

As always, standard disclaimer, get professional tax help and some idiot on a forum does not qualify.

That begs the next question, at what point should someone seek the advice of a tax professional? If you've made $10k I would think not.

The tricky part of this is that everyone's situation is different and everyone would have a different point at which they go to a CPA.