A WORD FROM THE AUTHOR:
Hey everyone - first of all, thanks for subscribing. It means a tremendous amount that you’re reading my words surrounding personal finance investment. My goal for Finessing Finance is to better educate the world on personal finance and to make money work for you. There are so many great tips and tricks within the PF community that weren’t made aware to me until I started taking my journey toward financial freedom. I hope you enjoy and please don’t forget to share with your friends!
BITCOIN IS BACK
I got a text this past week from one of my good friends regarding Bitcoin. Last Wednesday, he texted me, “Hey Jordan, you better get back on the Bitcoin train because it’s about to leave the station.” For additional context, this is the same friend who paid off a good portion of a new Tesla vehicle from selling Bitcoin from the first meteoric rise in 2017.
Immediately, my thumbs went over to the Robinhood app on my phone to see the current levels at which Bitcoin was trading. The sense of FOMO gripped my mind as I began to consider whether or not to buy. I had been seeing a good portion of the Twitter community chatting about it so my question for my readers is if this a good time to invest in the digital alt-currency?
A BRIEF HISTORY OF BITCOIN
I’m sure most of us are familiar with Bitcoin. I remember it was 2017 and I had moved to Los Angeles during a time when the word was on the tongue of everybody at your local bar. I remember avidly following the news each day to see Bitcoin spiking higher and higher. Back then, it seemed that only tech folks with massive computers could get their hands on Bitcoin. This was during a time when, in order to obtain Bitcoin, you essentially had to mine it (or find a way off the Black Market).
During this time, Bitcoin wasn’t as ubiquitous as it is today. In 2020, we’re able to buy Bitcoin through nearly every trading app imaginable and track the currency’s volatility every second. It’s found alongside anywhere your stock portfolio on the trading platform of your choice.
For a refresh on the overall history (from that one time you did Bitcoin research), Bitcoin is a cryptocurrency founded by the elusive Satoshi Nakamoto. The entire revolutionary idea was to create a currency outside of centralized fiat money. The system would be backed by what’s called “blockchain” technology. The idea here is that there is a large database always building upon itself with each transaction in process, adding protection to the chain.
BITCOIN AS PART OF YOUR PORTFOLIO
For many people, there is a question of where does cryptocurrency fit into your overall portfolio. I’ve known people to go 100% into crypto while arguing their strong dislike of the government and I’ve known people to turn a blind-eye.
The answer is that it’s up to you as an investor. Do you believe cryptocurrency has a place in this world over the next 50 years or is it a fad that seems to come in and out? And if it’s a fad, how can you best capitalize?
From my personal opinion, Bitcoin seems to be the only valid cryptocurrency that seems legitimized by the public (sorry, Dogecoin). There should be a small investment into Bitcoin alongside your overall stock portfolio (<10%). For the average everyday investor, you should primarily pay attention to companies that are tied to financial statements, however, don’t turn completely away to the idea of cryptocurrency.
At the end of the day, it’s up to you on whether or not to invest in Bitcoin.
WHAT I’M DOING
As part of my weekly newsletters, I’m going to conclude with my immediate personal next steps. I’m doing this to hold myself accountable and also quantify next steps for my readers.
Personally, I’m not going 100% into the Bitcoin rush right now. I’m afraid that it’s already too late to capitalize on the opportunity. Remember a few weeks after the news started talking Bitcoin last time? The value severely declined in what seemed like a matter of hours that lasted for weeks on end.
That said, I’m going maybe about 15% into Bitcoin. I’m not dismissing the opportunity but keeping an open eye on what’s possible and preparing for the inevitable (sharp?) decline in value.
When Bitcoin ultimately declines in value, I’ll be adding more of my investment in to take advantage of the rise when people start talking about the cryptocurrency again.
P.S. In asking my mother her thoughts on Bitcoin, she shouted, “A blackmarket conspiracy!”
Have a great week :)
-Jordan