Bitcoin Investment: Risks & Long-Term Strategies

You want our two cents on bitcoin? We’re not in the prognostication business and have no idea what bitcoin's future looks like. We haven’t the foggiest if it’s going to move up or down, create massive fortunes or erase them in a matter of minutes. But if it’s like any wildly speculative investment it’ll probably do both. And though we may boast the sexiest financial site on the web, Wealthsimple’s overall advice is actually quite boring: pursue long-term, steady growth with a balanced portfolio. And avoid speculation. (As much as we’d like to, we can’t claim authorship of this philosophy — it’s called Modern Portfolio Theory.)

All that said, we can’t in good conscience advise you to run out and invest heavily in bitcoin. Our advice has been consistent, whether it’s been about bitcoin, Snapchat, or the can’t-lose alpaca farm your uncle’s starting: to mitigate risk, you should never bet more money than you can afford to lose on any one speculative investment or stock. In plain, quantifiable terms, never gamble with more than 5% of your entire portfolio.

If you’re one of the lucky ones who got into bitcoin early and spend half your waking days on Coinbase, marvelling at how much you made, congratulations. Now’s a good time to rebalance your portfolio — that is, take some of your winnings off the table, and put them in a less speculative investment like a diversified mix of low-fee ETFs. Feel free to leave some in bitcoin, just not enough to sink you should it disappear overnight.