Thus far the BITA portfolio has been an unexciting place, more quiet suburb than Disney Land. The vast majority of our holdings are in diversified index funds (like good old VTSAX) with low expense ratios. In December I decided to spice up the place and added a single roller coaster ride to our quiet suburbia. Our portfolio now includes that most speculative of assets: cryptocurrency.
I am aware that this admission is likely to make most of my readers throw up a little in their mouths. Fear not, I have not lost my ever-loving mind. I don’t consider cryptos to be a sound investment. I firmly believe that when one puts money into cryptocurrencies, one is gambling, not investing. In June of last year I wrote about the craziness of crypto and FOMO, and in that post I said, “I may use the play money strategy outlined above in the future, but for now I am staying the course.” Well, the future is here.
Our Crypto-Conditions
How much did I invest in cryptocurrencies? Our cryptos make up a whopping 0.09% of our investment portfolio and 0.07% of our Net Worth.
This is an amount of money that we would not miss should it all trickle away down the drain, never to be seen or heard from evermore. This is an amount of money that does not in any way interfere with our serious investment goals for the year. We plan to save and invest somewhere in the vicinity of $300,000 in boring index funds by the end of 2018.
In addition to keeping the initial amount of the investment laughably low, I made up some rules that I would have to abide by if I wanted to play the crypto game:
- The maximum amount of money that I am allowed to put into crypto is 0.1% of our Net Worth.
- If the crypto portion of our portfolio ever happens to grow to more than 5% of our Net Worth, everything in excess of 5% must be sold off and invested in accordance with our investment policy.
- In order to put this money in I had to commit to spending a minimum of 90 minutes every week for a period of three months (starting in December) studying blockchain technology and understanding the various currencies and platforms.
A Peek Into Our Crypto-Portfolio
We currently hold Bitcoin, Ethereum and Litecoin in our portfolio. I’m using GDAX to trade (and that is not an affiliate link). I am not using a hardware wallet or a paper wallet because the amounts involved are so small that I can’t be bothered.
Tracking Our Cryptos
Long time readers will know that I am very fond of my sundry Google Sheets, and I use them in addition to Mint and Personal Capital to track our monies. So I had to find a way to track my new crypto babies using Google Sheets. Here is an excerpt from my tracking sheet, with fake numbers:
GOOGLEFINANCE() does not support coins other than BTC. So for the BTC row, that is what I use. In the Conversion Rate column I have the =GOOGLEFINANCE(“BTCUSD”) formula, and I multiply that by number of coins we own to get the Current USD Value.
Getting the conversion rate for ETH and LTC was a little more involved. I used the IMPORTXML formula. Specifically, for ETH, for example, the Conversion Rate column says =IMPORTXML(D20,“//span[=’text-large2′]”), where D20 points to the Data Source cell that contains a link to a site that displays the current conversion rate of ETH to USD. It is pretty hacky, but it gets the job done.
The Ride Thus Far
It has barely been a month since I became the not-proud owner of a few lonely coins, but I have had a lot of fun. I have enjoyed studying about the coins and the underlying technology, in some cases having to revisit the basics of stuff that I last looked at when I was in college. I have enjoyed pulling up my tracking sheet eight times a day and seeing a different number in the total every single time! On weekends too! This shiny new toy is far more exciting to watch than our real money. I think this may actually be a good tool to have in a bear market – I can amuse myself with my ever-changing cryptos instead of obsessively watching, crying over or worse, panic-selling my index funds.
We are less than a month in and our crypto holdings are up 18.18% (Edit: This statement was true when I sent this post to Mr. BITA, the editor of my site. In the time that he took to review the post, we dropped to a low of -28.3% and then back up 5.04%).
I plan to HODL and enjoy the roller coaster ride.
Welcome to the crypto community! Buckle up it’s going to be a bumpy ride! 🙂
What are your cyrptos of choice? How long have you held them? Cashed out any yet?
XRP, xlm, trx, etn and dabbled some in eos. XRP is the only performer of the group so far. All money is still in there.
At the very least you challenged yourself to understand the blockchain better. I think your strategy of selling off if you surpass 5% of your portfolio is wise. It’ll be interesting to hear updates!
I was just going to write my own blog post on this. I actually also took the plunge with crypto but is less than .1% of our portfolio.
i am in on the madness but i bought shares in the exchanges where the crypto trade. CBOE and CME. that way i only care that they are heavily traded and those companies are profitable and pay a dividend too. best of luck.
🙂 I am eagerly awaiting the time when I can have some gambling money in my portfolio! We just filled up our TFSAs (like Roths), and have one more target to hit, before I’m allowed to play with crypto. Bring on the roller coaster!
While I was reading the intro, I finished the sentence with .. Bitcoin! (in my head). At least you’re not using a shady kiosk in a dive bar, ahem brewery, to make the exchanges, lol.
Thanks for the blockchain theorem. It didn’t make sense until I saw that theorem, and the proof. The proof is what brought it home for me. (major eyeroll)
It sounds like a fun place tos tash some allowance money if I can’t get out to Vegas anytime soon. Like you I wouldn’t put any portfolio killing amounts in it, but it does sound fun to speculate on, and “gamble” with. May the odds always be in your favor! 🙂