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RE: Model Portfolios for investing in Cryptocurrencies
Hi cryptoindex,
Thanks for this post! Few things:
- Is there a more detailed breakdown to the Stocks and Bonds portions of your portfolio? I know this post is about cryptocurrencies, but I'm still interested. I would like to know if you divide the stocks by some criteria, as market life-cycle/industry etc.
- It would be really interesting to see this done for different age groups. How do you think different portfolios should look like at different stages? Also, would you change anything about the crypto sub-portfolio for different age groups?
- I would like to push back on your advice for a 5-7 coin holding - keeping in mind that you did state that it was just an example. Sure, increased number of coins doesn't necessarily equate with improved quality of diversity, but I think what matters the most here is the size of the coin's share of the portfolio relative to some other indicator (market cap, supply, age, etc). Given how cryptocurrencies don't have to come in "1s", you could theoretically hold a portfolio of over 800 coins while still having a "well-diversified portfolio".
On my blog I have some details on investing outside of crypto. I will eventually update the page with more details on my exact holdings. Generally I go with an ETF split that indexes these markets:
50% US Total Market, 40% World Markets, 10% Emerging Markets.
The general rule is 100 minus your age is the percentage of your portfolio that should consist of stocks.. so if you were 25 you would hold 75% stocks and 25% bonds. The sub portfolio for crypto is mostly personal preference and risk tolerance.
The amount of different types of coins an investor purchases is again personal preference. There is nothing wrong with a portfolio's crypto portion being 100% bitcoin - and it might actually perform better than one that has a lot of alt-coins that under-perform/lose value...
A lot of people in this space are looking for "the next Ethereum" and invest in the newest flavor of the month coin without doing any real research. It also takes a lot of time managing the private keys and wallets for each coin holding.