There can be no doubt that 2017 is the year of cryptomania. Every day more and more investors, especially young earners want to try their luck with Bitcoin, Ethereum, Litecoin and any other crypto coin they can get their hands on. Cryptomania 2017 is fantastic to watch as it unfolds, but dear bitcoin and altcoin investors, would you consider slowing down for a moment to look at your asset allocation?
The moment we want to believe something, we see all the arguments for it, and become blind to the arguments against it. – George Bernard Shaw
I have argued against it: Three Reasons to avoid Bitcoin or any other cryptocurrency
I have argued for it: Bitcoin: Is it a Ponzi Scheme? A Pyramid Scheme? Or a Bubble?
Have some considered both sides: If Bitcoin becomes expensive and popular in future, should I buy some now?!
And have offered simple way to invest with (wrong) guidance: How to buy Bitcoins in India: A simple DIY approach to Bitcoin investment
and how to invest in crypto: Investing in Cryptocoin vs Trading in Cryptocoin
Cryptomania 2017: Asset allocation table
A Mirae fund is used for the large-cap Why? Becuase it is good: Mutual Fund Review: Mirae Asset India Opportunities Fund
A Franklin Savings Plus fund is for the debt part. Why? Becuase Franklin India Savings Plus Fund :A Debt Fund For First-time Investors?
A Quantum fund is used for cash. Why. Because it invests in good, solid debt: PlumbLine November 2017: a handpicked list of mutual funds
What you see below is the initial purchase in Jan 2016 and the values and asset allocation every quarter after that. The yellow rows are attention-grabbing but get to it the last.
Cryptomania 2017: Other poor investments!
Bitcoins growth is so spectacular that I first need to plot the other instruments. These are in normal scale.
Cryptomania 2017: Bitcoin the Giganotosaurus!
Now with Bitcoin added, I thought the log scale (shown below) will help, but it does not!! Bitcoin drawfs other instruments (for the period considered)
Asset allocation with Bitcoin: January 2016
The asset allocation pie charts say the story the best.
Asset allocation with Bitcoin: December 2017
Now scroll back to the table above and look at the yellow rows. I will wait.
Back? Okay, now this is the point of the post: Due to the incredible growth in Bitcoin, a 1% allocation (which was peanuts) in Jan 2016 has become a coconut in Dec 2017 with 21% allocation.
If you lose a peanut, you will not bother to search or feel sorry for yourself. Please don’t tell me you will feel the same if you lose a coconut!
What am I trying to say?
Book profits now (normal speak)
Book profits now (Yoda speak)
I had assumed no investment in crypto or anywhere else after Jan 2016. How will the Dec. 2017 pie chart look if you include those?
Hey, this is not part of my asset allocation dude!
What is that I hear you say? “This was only a small amount and not part of my asset allocation calculation”. Okay then, it was only a small amount, to begin with, so who cares about its value today? Sell it off and give it you a charity. Better still, give it to me – your favourite obnoxious pig-headed blogger.
It is only a small amount. Does not matter how large it is now, isn’t it? So you don’t care if it comes back to that small amount again, right?
If it would hurt now to see it go from your hands, it IS part of your asset allocation. Wake up and shift at least part of your gains to safer asset class like equity (boy I never thought I would write that!) or even better to debt before the risk you took goes waste. And it will, even if Bitcoin is 100% legit. See why: Investing in Cryptocoin vs Trading in Cryptocoin.
Asset allocation matters.
It is the only metric that determines the health of your wealth.
Invest in cryptocurrencies with an asset allocation and rebalance it as fast as your wealth grows.
Do check out my books
|You Can Be Rich Too with Goal-Based Investing, my first book is now available at a 35% discount for Rs. 258. It comes with nine online calculators. Get it now.|
|Gamechanger, my second book is now only Rs 149 (25% off). Get it or gift it to a young earner|
|The ultimate guide to travel by Pranav Surya is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)|
Use this form to ask Questions or reg. the robo template ONLY (For comments/opinions, use the form at the bottom)
And I will respond to them in the next few days. I welcome tough questions. Please do not ask for investment advice. Before asking, please search the site if the issue has already been discussed. Thank you. PLEASE DO NOT POST COMMENTS WITH THIS FORM it is for questions only.
[contact-form][contact-field label=”Name” type=”name” required=”1″][contact-field label=”Email” type=”email” required=”1″][contact-field label=”Ask your question (Got an opinion or comment, use comment box at the bottom of the page. DO NOT post them here)” type=”textarea” required=”1″][/contact-form]
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
- We are also on Google PlusandPinterest
Do check out my books
Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner
The ultimate guide to travel by Pranav SuryaThis is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)
Free Apps for your Android PhoneAll calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)