This is the right amount of bitcoin to keep in an investment portfolio

  • Price volatility notwithstanding, virtual currency is here to stay, said Ric Edelman, founder of Edelman Financial Engines.
  • Allocating 1% of a portfolio toward bitcoin could give exposure to this asset class without damaging finances, Edelman said.
  • At its zenith on Dec. 15, 2017, one bitcoin was worth close to $20,000. The price is currently around $9,300.
  • If you can’t beat the crypto crowd, it might be time to join them, experts say.

    Virtual currency and its underlying technology, blockchain, are here to stay – and that means both will play some role in investors’ lives.

    “It’s actually very hard to decouple blockchain and bitcoin,” said Sunayna Tuteja, head of digital assets and distributed ledger technology (DLT) at TD Ameritrade.

    She spoke at the TD Ameritrade LINC conference in Orlando, Florida, on Wednesday.

    “On the one end, how do we commercialize the value of DLT and blockchain to bring more innovation to traditional markets?” Tuteja asked. “On the other end of the spectrum: How do you tap into this nascent asset class?”

Op-ed: Small amounts of bitcoin can have a positive impact on your portfolio

  • As more investors eye cryptocurrencies such as bitcoin, it’s key to keep in mind that many asset classes once thought too volatile for average investors are now common.
  • Some recent research finds small weightings of bitcoin have an outsized positive impact on risk-adjusted returns and diversification relative to other alternative assets.

    When a financial advisor discusses the appropriate asset allocation for a portfolio, they are essentially trying to construct a plan that maximizes expected returns based on a given level of risk.

    The advisor pays less attention to the behavior of an individual security and instead focuses on how different asset classes work together as a group.

    So, what is bitcoin’s role in an investment portfolio and does it make sense to incorporate it?

    Conventional wisdom suggests that while bitcoin has delivered great returns, it will add substantial risk to a traditional stock/bond portfolio.

    With that said, it’s important to remember that many asset classes that are now commonplace in a portfolio were at some point considered far too volatile for the average investor. We don’t give it a second thought to include emerging markets or technology stocks into an allocation today, and yet there was a time when the pundits believed they were far too risky.

    Their concerns were justified.

    Since the 1988 inception of the MSCI Emerging Markets Index, there have been seven drops of 25% or more. Moreover, Nasdaq stocks collapsed by 79% during the dot-com bust as technology companies fell at a stunning pace.

    Nevertheless, they both rebounded and paid off handsomely when included in a diversified portfolio that considers time horizon and risk tolerance.

    It seems that the same arguments have been made about digital assets, even as a long-term study by VanEck found that bitcoin had exhibited lower volatility than 112 stocks of the S&P 500 in a 90-day period and 145 stocks year-to-date as of Nov. 13, 2020.

‘OK, boomer’ : What’s behind millennials’ growing resentment for their predecessors?

The downturn of the pandemic economy has hit many groups hard. But for many millennials — those born between 1981 and 1996 — and Generation Z, who follow them, that pain — plus a number of other factors — are creating questions about who is responsible. Over the next few nights, economics correspondent Paul Solman is going to examine this. He begins tonight from the perspective of some millennials.