Is There Room For Bitcoin in a 3-Fund Portfolio?
It's in our very nature to want to invest in things that have risen aggressively in the recent past -- just this year, and as of this writing, Bitcoin is up about 65%. Its meteoric rise has gained tremendous attention from even the most stoic, long-term investors: those who subscribe to the idea of a "Three-Fund Portfolio." Does the cryptocurrency merit inclusion in your portfolio if you're a set-it-and-forget-it investor?
A three-fund portfolio refers to an investment allocation consisting of only three passive funds: a domestic total stock fund, an international total stock fund, and a total bond market fund used to smooth returns. Someone would choose this method if they want to simply invest their money, periodically rebalance, and focus on the long term. Other advantages of the strategy include:
There is an argument to be made for including Bitcoin in a three-fund portfolio, but the allocation should be small. From an extremely general view, many see Bitcoin as the decentralized currency of the future, and a small but growing number of large companies have demonstrated their willingness to commit significant amounts of money to Bitcoin portfolios (among them, Tesla and Grayscale). Enthusiasts of the cryptocurrency cite its scarcity -- only 21 million coins will ever exist -- as a primary reason for its explosive price growth potential. They also cite its durability and rapidly transferable nature as reasons to invest.
Source Fool.com
