June 09, 2020 |James Messi
Between 5 and 10 years ago few would seriously think that Bitcoin could be an asset included in a typical retirement portfolio. However, due to a range of factors more and more are making the change.
Previously, sophisticated investors weren’t able to get involved because counter-party risk was too high. Now there’s a number of crypto hedge funds starting up and big well-known banks opening blockchain departments. These are clear indicators that something valuable is going on here. If you factor in the obvious positive price trend that Bitcoin has seen over the last 10 years then perhaps it’s time to ask yourself… Should I have some Bitcoin in my retirement portfolio?
Learn about Bitcoin
If you’re new to the space it’s worth getting properly acquainted with the benefits and drawbacks of blockchain technology. I’m not asking you to understand in detail how a SHA-256 hashing algorithm works, but perhaps knowing the importance of decentralized technology is a good starting point. “Never invest in a business you can’t understand” – Warren Buffett
As a crypto exchange that has dealt with a multitude of different coins and tokens, we understand the value people put in blockchain technology. We firmly believe that everyone should at least consider including bitcoin in their retirement portfolio and here’s why.
What if you invested in Bitcoin 10 years ago?
In 2010 Bitcoin could be bought for pennies. Now to own just one Bitcoin would cost you between $9,000 and $10,000. Had you invested $1,000 in 2010 you would have roughly $135,000,000 to your name. No that’s not a typo, $135 million.
If you had the knowledge or courage to invest early on then forget about working a 40 hour week until you’re 65, because you’d have enough money to never need to work again. You’d literally have complete and utter financial freedom.
Most would say that it’s unlikely that we’ll see that kind of dramatic price action again, but this links nicely into my next point..
It’s not too late to add Bitcoin to your portfolio
You may have missed the first initial surge and it’s unlikely that Bitcoin’s price will rocket 100,000% again but that doesn’t mean that the good times have come to an end.
Comparing Bitcoin’s market cap to other assets quickly shows that there’s a gargantuan gap between what Bitcoin has to offer and what it’s currently valued at. We’re still in the early stages of blockchain development and new announcements are made most weeks. In the last few years, we’ve seen a plethora of new functionalities and features added to compliment the blockchain. For example; Futures, Options, Interest-bearing accounts, Collateralised Lending facilities, and so many others. Despite all the new advancements, there is still room for so many more possibilities and it’s only a matter of time until they’re implemented. Many universities are starting entire modules devoted solely to Bitcoin.
Most people involved in blockchain can see that the value that the technology offers is far and above the current market price. That gap will only increase when the functionality naturally progresses. You may not be in first class on this train but at least you won’t miss it altogether.
Bitcoin rewards long-term holders
Bitcoin is not an asset that has to be day-traded in order to get the best returns. In fact, the highest returns have been seen by people who haven’t touched their assets in years. Therefore, the forces of greed and fear haven’t impacted them, averting a possibly regretful decision.
The beauty of blockchain is that (historically) returns have been consistent for those who ‘HODL’ (Hold On for Dear Life). So, unlike some other assets which require attention, trading or holding costs, with Bitcoin you can simply buy some and leave it for long periods of time without having to directly interact with it.
Bitcoin in your retirement portfolio
Before you add Bitcoin to your retirement portfolio, there are a few important points to consider. The first is how you should determine the percentage of your portfolio that you can safely move into Bitcoin. There are different factors that come into play when making this decision. They will be discussed in more detail below. The second is how you will actually buy Bitcoin so that you can hold it long-term. There are virtually endless methods you can use to acquire Bitcoin. Some are more safer and reliable than others. Keep reading to find out which method is recommended.
How much Bitcoin should you add to your retirement portfolio?
No one is saying you should take all of your money out of stocks and bonds and buy the latest altcoin but just like anything, start with a little bit and find out if it’s for you. Before you get into any swimming pool you test the water before going in, why should this be any different?
With a typical retirement portfolio, most respected portfolio managers would recommend putting a large stake in safe assets like bonds, another large stake in stocks and other mildly risky assets, and finally a safe amount in very risky assets in order to increase average returns. If you were going to invest in a risky asset, then why not invest in something that has near-unlimited upside potential. Bitcoin has the potential to flip what everything we know about our monetary system on its head. Instead of our currency being inherently inflationary, why can’t it be deflationary. Instead of central bankers controlling the supply and therefore price of our savings, why not let clearly defined mathematical systems (that can’t lie) govern instead.
How to buy Bitcoin
When picking your preferred medium for buying bitcoin you’ll need to take the following factors into account among others:
• Legal reassurances
• Custody options
• Fiat options
Having just launched our 2.0 version, we’re growing at a quick speed but can already match those key areas of interest. We are not some dodgy exchange based in a country you’ve never heard of, we’re a US regulated exchange based in Chicago, all our team members are public and can be seen on their respective LinkedIn. In short, we’re not hiding anything.
We’ve just announced institutions-grade custody through Curv which will offer protection on your assets so you have peace of mind in knowing that your savings aren’t being mishandled.
In the last few weeks, we had millions of dollars in volume as well as new and exciting product launches like listings, custody, and fiat off/on-ramps. It’s clear we’re progressing quickly.
We’re very proud to offer some of the best fiat ramp possibilities in the industry. In a short while, we’ll be launching fiat pairs to 6 global currencies to complement our many global customers.
The point was made earlier that it would have been wise to invest early on. If you miss out once then it’s not a big deal, but don’t allow yourself to miss out again.