You Could Put 5% Into This Asset.
I own a lot of gold.
I own a lot of Swiss francs.
Relative to my entire nest egg, those two assets represent about 45% of the financial assets I own.
And, so, people who learn of this fact assume that I am extremely conservative with my investing.
Until they find out I also have between 20% and 25% in crypto.
And then they just think I’m nuts…
There is, however, a method to this madness.
An important reason why I hold so much crypto.
Truth is, I am conservative in my largest retirement account. I’ve lived the financial destruction wrought by Wall Street, the Federal Reserve, and the housing market too many times in my adult life.
I want that account to survive the trouble that’s coming down the tracks in America—come what may.
But…
I also want growth. And not just any growth. I want (to borrow a line from Pink Floyd) “Money. It’s a gas” growth. And the stock, bond, gold, and currency markets are not going to ever offer up that.
The growth I’m talking about isn’t watching my investment double in five years. Or even two years.
I’m chasing investments that can 5x or 10x within a year.
And only crypto offers that possibility.
Which is why my conservative gold-and-franc main dish comes with a side-order of highly aggressive crypto.
To me, it’s the perfect combo: the peanut butter and jelly of portfolio design.
I feel sleep-tight-at-night secure with one side of my nest egg, but I know I can wake up to find that the other side has gained tens of thousands, maybe even $100,000 in value overnight.
That is not a fever dream.
Earlier this spring, I would wake up in the mornings, check my crypto portfolio on an iPhone app that tracks my holdings, and I would roll over to put the phone in my wife’s face.
Over the span of a few months—October to March—one particular position rose from a value of about $4,200 to $119,250. I have never had a stock nearly 30x in five months.
So, I am quite happy packing my portfolio with such a large percentage of crypto.
And crazy as this might sound—it’s certainly going to have financial planners slamming down their firsts and screaming, “NO!”—I’d argue that this barbell approach to nest-egg planning has merit for others, too.
The bulk of my portfolio remains relatively safe. Along with the gold and francs, I have about 4% in inflation-protected bonds and 20%-ish in stocks like Google, Walmart, Abbott Labs, Merck, Pfizer, and the like.
But nothing I own in that corner of my nest egg will ever nearly 30x in a few months.
Crypto can and will.
This is why I’ve been telling Field Notes readers for several years now to put some crypto into their portfolio.
I don’t say that people should follow my lead and put 20% to 25% in crypto. My risk tolerance, I suspect, is different than most people my age.
Crypto is volatile. And even though the volatility I deal with is highly annoying, I just ride the waves, knowing they’re taking me toward an epic moment of wealth creation.
I fundamentally believe that—because I see how crypto is fundamentally changing the world around us.
I want my readers to be a part of that fundamental change because that’s where the epic wealth is found—the generational wealth.
Which is why I routinely advocate for a crypto position of at least 5% in a portfolio.
I’ve had attendees at conferences tell me their financial planners won’t listen when they (the client) bring up crypto opportunities and share my columns.
That is a bad financial planner. Should probably be fired. Because he/she is either blind to the fundamental rewrite that crypto and the blockchain are imposing right now on society, government, finance, gaming, entertainment, education, and on and on…
Or they’re freaked out by crypto, don’t understand it, don’t want to take the time to understand, and so they play the Nancy Reagan game and “just say no.”
Yet consider what a 5% position means:
- You lose it all, and one year’s worth of dividends and interest payments in the rest of your portfolio is going to recoup all or nearly all of what you lost. Not much pain in that.
- If crypto performs as I expect, 5% can grow to 15% or 20% of a portfolio or more, and at a pace that will far exceed stocks and bonds and cash.
So what’s the real risk here?
The risk-reward profile is so heavily skewed toward reward that not committing at least 5% to crypto is, to me, financial dereliction.
In fact, 5% in crypto means you could scale up your exposure to bonds and cash, if you wanted, because the expected return on crypto exceeds the expected return on stocks. So, you could arguably build an even safer portfolio on the sleep-well-at-night side of the nest egg.
Like I said, there’s method to the madness.
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