My investing Isa is a sea of red but my drip-fed cryptocurrency gamble is 28% up despite the spring plunge, says ADRIAN LOWERY: Plus I’m earning 5% interest on bitcoin…
My Isa is a sea of red at the moment. The Asian and emerging markets funds are all well down on the year for reasons well documented in the financial press in recent months.
Some of the techy, growth-orientated funds are down too, others are flat, the rest up a few per cent. The thematic ETFs are all over the place.
At the moment, it’s an object lesson in the benefits of passive investing over a more active, pick’n’mix approach. A global equity index fund or ETF would beat it hands down – at the moment.
I also committed the sin preached against by all good investing commentators, including our own: I panicked and sold out half my portfolio in May.
The author has ‘chucked a bit [of cash] at some of the more recherche options like solana, which has benefitted hugely recently from its association with the “non-fungible token” phenomenon’.
I did so because I was sure we were in for a big stock market correction. And we could well still get one. The proceeds of my fire-sale are still there in my Isa, and the cash could come in very useful if the markets go red.
At the moment though it’s doing nothing. Unlike the cash I’m holding in cryptocurrencies.
It will annoy many of our readers if I call this ‘an investment’ rather than ‘a gamble’ – but I have tried to treat it like the former.
Since December I have drip-fed various amounts of sterling into my Ziglu account, which charges a fee of 1.25 per cent for buying and selling cryptocurrencies (at least, the 10 that it currently offers).
I have bought into crypto-currencies each month with an emphasis on the more established ones – obviously bitcoin and ether but also cardano. I’ve also chucked a bit at some of the more recherche options like solana, which has benefitted hugely recently from its association with the ‘non-fungible token’ phenomenon.
Diversification you might call it.
The bitcoin price in dollars over the last 12 months.
The result is that from £2,751 committed to the account since December, the balance now stands at £3,521. A gain of 28 per cent in eight months, despite the massive slump in bitcoin and other digital currencies in May and June.
Another key tenet of traditional investing: always understand what it is you’re investing in. Do I?
In short, not really. But that applies to many equity sectors now: how much do you really understand about the technology giants? About artificial intelligence and cybersecurity, biotechnology and digital payments?
Companies like Tesla and Amazon might have balance sheets, but did any early investors put money in on the strength of their accounts?
Investing is more of a gamble for most people than it ever was, because the earnings potential of companies in many of these growth sectors is opaque at best. I can totally understand the need for understanding – but that really means sticking with the old economy.
Finally, yield is insisted upon by many investors who think any decent asset must pay an income. About £15 of the gains on my bitcoin holding comes from the 5 per cent interest on BTC that Ziglu introduced in February.
The majority of us have become dislocated from the means and mechanisms of production and commerce – it’s one of the unsettling aspects of modern life. You may as well try and make it work for you.