My personal crypto allocation is 33% as a 36 year old investor. This article will discuss how much crypto should be in your portfolio based on your age and risk tolerance.
Experts Recommend Between 3 to 5% Crypto Allocation
General financial experts such as Kevin O’Leary recommend investing no more than 5% of your portfolio in cryptocurrency.
Of course, I believe this is way too conservative unless you are a baby boomer or plan to retire within the next few years.
I believe cryptocurrencies like Bitcoin will become the global reserve currency in the future so it makes sense to buy as much BTC as possible while it’s relatively cheap.
Crypto Allocations by Age
Here’s a recommend table of crypto allocations based on your age. You can always adjust these as well.
|18 to 29||50%|
|30 to 39||33%|
|40 to 49||25%|
|50 to 59||20%|
|60 to 69||10%|
When you are young, you can afford to take more risk and invest in cryptocurrency to explode your net worth in a short time.
As you get older, you must consider reducing your allocation to mitigate risk and prepare for your golden years. Crypto is still a high risk, high reward industry that’s susceptible to hackers, thieves, etc.
Stock & Crypto Portfolio Example
Let’s say you are a 30 year old investor who wants some exposure to cryptocurrencies. You have $10,000 to invest but don’t want to go all-in.
You could put together a fairly simple portfolio of stocks and crypto to give yourself a high growth portfolio that will grow as you near retirement.
Here is a sample portfolio with $2,000 invested in 5 different assets with a 60/40 stock to crypto allocation.
$10,000 Sample Portfolio
|Alphabet (NASDAQ: GOOG)||20%|
|Apple (NASDAQ: APPL)||20%|
|Tesla (NASDAQ: TSLA)||20%|
This is a solid investment portfolio with plenty of upside. You can hold this portfolio for several years and do quite well in my honest option.
33% is the Perfect Allocation for Me
Holding 33% of my portfolio in Bitcoin works well for me because I could lose all my crypto and still have 67% of my net worth.
I understand many Bitcoin maxis will recommend going all-in 100% into Bitcoin but that’s way too much risk for me. As Bitcoin increases in value, I believe my crypto holdings will rise in value and I can sell a bit to take profit and reduce my risk.