The Blockchain Believers Portfolio is an easy-to-use template for investing in blockchain in a smart and sensible way. We designed it here at Bitcoin Market Journal in order to bring blockchain investing to everyone.
First, let’s review the principles behind smart blockchain investing:
- Blockchain is a slice of the pie. Treat blockchain investments, like bitcoin and altcoins, as a part of your overall investment portfolio.
- Blockchain is your “mad money.” Keep the majority of your investments in stocks and bonds, with a small percentage (between 2.5%-10%) in blockchain.
- Stick to safety. Within your blockchain investments, stick to the top altcoins, or other investments that you have thoroughly researched. Avoid speculation on “smallcoins.”
- Grow the pie. Contribute a small amount from your paycheck each month to your investments – preferably through direct deposit – even if it’s just $100.
- See losses as lessons. As with all investing, don’t invest more than you’re willing to lose – and if you do lose, see it as “tuition paid” for valuable learning.
With those principles in mind, we’ve developed two copy-and-paste portfolios that you can use to guide your own investing.
The Baby Blockchain Believer portfolio is a more conservative approach (2.5% invested in bitcoin; the rest in stocks and bonds).
The Big Blockchain Believer portfolio is a more aggressive approach (10% invested between bitcoin, Ethereum, and Ripple; the rest in stocks and bonds).
We compare these with the Non Believer Portfolio, which is just invested in traditional stocks and bonds—no blockchain at all.
I lay out the Blockchain Believers Portfolios in much more detail in my book BLOCKCHAIN FOR EVERYONE. I show that performance of these portfolios radically outperformed the stock market for the three years it took me to write the book (from 9/1/15 through 9/1/18).
But how would this strategy hold up over time? I couldn’t predict that when I finished the manuscript on 9/1/18. So let’s see how things played out during the “crypto winter” that followed.
The stock market, measured by the Vanguard Total Stock Market Index Fund (VTSMX), is priced about where it was last September. The bond market, for which we use the Vanguard Total Bond Market Index Fund (VBMFX), is up slightly (about 2%).
Blockchain investments have not performed as well: bitcoin, Ethereum, and Ripple are down -26%, -47%, and -14%, respectively. But here is the power of the portfolio: unlike people who bet big on bitcoin and lost it all, our diversified approach keeps the losses manageable.
So far, it pays to be a non-believer. That may sound strange coming from a blockchain evangelist, but such is the power of my belief: I am sharing the results with you in full transparency, confident that blockchain will win in the long run.
An Open-Source Portfolio
In the spirit of blockchain, we are open-sourcing this portfolio, so that anyone can use it for their own investments. This newsletter is free to share, not hidden behind a subscription paywall. Our goal is to help investors hedge their risks, while sharing in the rewards.
Education for everyone. Investing for everyone. Blockchain for everyone.