Diversification is the Only Free Lunch in Investing

The title of this blog post is one of the best ideas of a Nobel Prize winner Harry Markowitz.

The idea is that to be successful in the long run, you can’t have all of your eggs in one basket, you’ll want to have a variety of different assets.

If this makes sense to you will know then want to make sure your investments are all in one basket. Diversifying a small percentage into Bitcoin and cryptocurrencies like Ethereum are fantastic ways to capture upside potential while not having too much risk with the volatility.

Here’s an example of a 5% Bitcoin allocation over a four year period.

History doesn’t repeat itself but it often rhymes and so the next 5 years are likely to be similar to the past results with Bitcoin helping your investments to outperform a traditional portfolio.

How much is too much Bitcoin in your portfolio?

It depends on your risk tolerance, with some now only living in cryptocurrencies and others just slowly wading into the asset class like an old women getting into a warm bath.

For the average investor, a 1-10% allocation to Bitcoin is a smart percentage based on analysis performed below by Financial Horse.com.

Consider dollar cost averaging into your Bitcoin (BTC) position over a one year period or longer and plan to hold the investment for 5-10 years. Putting the plan in place is often the hardest part for most people. The execution is easy once you commit to a plan.

Diversify into Bitcoin to increase your investment performance and reduce your chances of missing out on the greatest wealth transference of this generation.

 

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