In this series of posts, I introduce concepts I think would be benficial for a wider adoption of crypto. Please find the first article about address checksums here.

In this piece, it's more about a simple method for the average private investor to invest into cryptos.

How people invest

Let's imagine Bob to be an average private investor wanting to back up their retirement plan with a portfolio of investments. If Bob googles for investment opportunities, he'll find all kinds of options ranging from low risk, low return to high risk, high return. What they typically all have in common is that Bob can buy (pretty much) all of them via his bank, mostly online: stocks, gold, funds, fund shares, bonds or other fixed interest investment vehicles.

Now depending on Bob's risk appetite (and also other parameters like his age or income), a typical investment advisor will tell Bob whether to invest more into stocks or into fixed interest. However, they will all advice Bob to diversify his risk by investing into multiple types of investment vehicles.

Diversification can also mean to buy stock ETFs instead of individual stocks, as ETFs typically reproduce a certain index and therefore a basket of stocks like the S&P 500.

Savings plans

For ETFs, a popular way of investing is through savings plans. That way, Bob doesn't buy e.g. 100 shares at 100$ each at once, but he orders his bank to buy ETF shares worth 50$ every month until he cancels. Why does this make sense for Bob?

• He doesn't need to invest a big portion of his savings at once
• He's better protected against short-term downside risks. After all, if the price drops to 50$, he will be buying 1 share per month rather than 0.5
• It's very convenient for Bob and he doesn't have to bother

Of course, it also means that Bob won't realize all the profit when the price goes up, but here it's about diversifying risk, right?

Savings plans for Bitcoin

Ever since I started trading cryptos almost 5 years ago, I wished there was something like savings plas for Bitcoin. I could've invested 50$ every month to buy the equivalent of Bitcoin and keep them in an online wallet that is controlled by the bank or - as in the case of Fidor bank and bitcoin.de - managed by a partner. This would take the risk of storing Bitcoin securely from the users, but it would've shown an awesome opportunity to participate in the rise of cryptos.

A three-year example

Let's image Bob had started buying 50$ worth of Bitcoin three years ago in January 2015. If had set up his savings plan, he would have

• invested 36*50 = 1800$ (which doesn't sound much)
• bought a total of 3.774 BTC now worth more than 52,000$ (based on a 14,000$ Bitcoin price as of today)
• therefore made an ROI of over 2800% in those three years

In comparison, buying those coins all at once (back then a very uncertain investment) would have brought him 5.734 BTC or around 80,000$ now.

Why this would help

An offering as I described would help the crypto community in several ways:

1. It would make cryptos more accessible for everyone
2. It would reduce the need for Bitcoin or other crypto ETFs (which apparently are difficult to achieve)
3. It would create a new generation of long-term hodlers of crypto. After all, savings plans mostly make sense in the long run

Would you invest in crypto savings plans? Or do you even know a bank offering them?